Investing in Germany + Platforms [2023]

by | Jun 19, 2022 | Banking & Finances in Germany

Home 9 Banking & Finances in Germany 9 Investing in Germany + Platforms [2023]

Germany, previously known as the Federal Republic of Germany, is based in central Europe. It is among the most famous countries in Europe. The economy of Germany is very strong, which is why it has a culture with strong investment opportunities for investors in Germany. Investors living in Germany always look for various profitable opportunities to make money and grow their wealth.

Pros of Investment in Germany

You will probably think you are getting your salary every month and saving some money in the bank for rainy days. You are sure that your savings are safe, and there are no risks of losing your money and savings. You must be wondering why you should invest in Germany. There are various reasons and benefits that you must make your money more powerful in purchasing.

If you do not invest, you will lose the value of your money in a few years. Inflation is increasing daily, so your money should not stay idle in bank accounts.

Investors get an annual tax allowance on any capital income. If an investor owns a property for ten years, they will not have to pay the 25% of their investment to the tax office. So you must prefer to buy a property for a long period in Germany.

Cons of Investing in Germany

German’s customer protection laws and legislations are not advanced enough compared to the other countries. Due to this issue, there are high chances that an investor receives false information regarding investment opportunities. An investor may also receive unreal assurance regarding their investment selection.

Another major drawback is the high tax on the investment in capital gains. The tax rate on capital gains is usually 25%.

Important Instructions

It is always recommended that investors must use a professional platform while looking for German investment. The annual expenses to use investment platforms are low in Germany. In Germany, investors have a huge probability of retaining ownership of the assets they are investing in. They enjoy the efficient, fast, and automatic collection of all payments and dividends. They receive these payments from an investment in bonds, stocks, and funds.

These platforms must submit their reports to the IRS, but few organizations do not follow the rule to avoid any fines and penalties related to human errors, mistakes, and omissions. Investors must research carefully before selecting any professional platform to ensure their investment is going through an expert procedure. Investors must also know about the risks associated with using selected platforms and investment opportunities.

It would be best if you made an ultimate goal about why you need to invest your money. It can be buying a house or vehicle in the future, educating your children, marriage events, travel plans, retirement plans, or a good lifestyle. Once you know your objective, you must find a relevant and suitable investment opportunity for you. Depending on your ultimate goal, you can look for both short-term and long-term investment plans.

You are responsible for filing your tax to the IRS, so you must know about the tax impacts to avoid double taxes.

Things to Consider Before Finalizing Investment Decision

It will help if you consider the following factors before investing in Germany.

  • Scam investments – be careful and check if an investment opportunity is real and good enough to give you benefits. If you are checking for investment opportunities on the internet, you must always check the reviews and comments by previous investors. In this way, you can find the best investment plans.
  • Diversification – you have already heard that do not put your all eggs in one basket. This is true. Try to invest in different plans to get a better return.
  • Risk buffer – you must not invest all of your savings. Keep some amount with you to meet unexpected expenses, if any.
  • Risks and returns – all investment opportunities have some risks associated with them. The level can be different, but the risk is always there. Before investing your money, you must know the kinds and levels of risks associated with the chosen investment plan. You can also consult a professional financial consultant or an advisor if you cannot understand this.
  • Know your rights – you have enough time, usually two weeks after making the contract. You can think again and cancel the contract during this period if you are not comfortable with your investment plan. Once this time ends, you will not be able to cancel your contract.

Best Products for Investment

Every investor is different in terms of temperament, investment period, risks, and returns associated with the products. There are a variety of products available for several different investors in Germany. Investors may select a financial product according to their needs and requirements. There are several products given below with both high and low risks.

  • Guaranteed pension plans
  • Private pension plans
  • Deposit plans by an insurance company
  • Cash saving plans
  • Investment in saving accounts
  • Invest in exchange-traded funds
  • Bank deposit in a bank that is covered with a government guarantee scheme
  • Mutual funds with different risk categories
  • Investment in German’s stock market
  • Investment funds with different risk categories
  • Closed-ended funds that have a finite maturity date
  • Investment in government long-term projects
  • Investment through trading
  • Investment with P2P lending
  • Investment in real estate, residential land, or property
  • Hedge funds
  • Certificates and other instruments that reflect movement in market and indices
  • Private equity investment

Investment Through German Banking System

The German banking system is efficient but lacks control and supervision. Banks usually have a small collection of financial products available for investors in Germany. Bank would first check the investor’s creditworthiness to complete the investment process.

Best Investment Platforms in Germany

Here is the list of best brokers and investment platforms in Germany.

  • Trade Republic is the platform for beginners. They offer free securities accounts and saving plans. They have a mobile-only app in English.
  • eToro boost forex traders, cryptocurrency traders, and CFD traders. This is an easy-to-use platform.
  • Commerzbank is a traditional branch banking system that offers clients free checking and security accounts. Their saving plan prices are moderate but expensive for active and inactive traders.
  • Interactive brokers are for seasoned and new traders looking for a simplified trading interface.
  • Scalable capital offers its clients a free securities account and only one free saving plan. They are offering flat-rate plans for their active traders.
  • SmartBroker is the platform with low trading fee and also have a wide variety of Stocks, ETFs, Certificate, Bonds and Warrants.
  • Capital.com is a platform with more than 300,000 clinets and have a AI based mobile interface and one of the best in Germany.

And That Is It!

So, that is all about investing in Germany. Break down your money, and choose investment plans based on risks, returns, and period. Know about your rights and all the details regarding your chosen investment opportunity. If you have some ambiguity, you must find a professional advisor or a financial consultant for the necessary guidance and help to start your investment procedure.

⚠️ In our articles, we use affiliate links from our affiliate partners. If you click these links and purchase a service or a product then we may earn a small commission, without any extra cost to you. This way, we stay motivated and bring you all you need to know about Germany. 

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