Investing is a great way to make your money go further and it’s important that you try, even if you don’t successfully make any money the first time around. There are lots of ways to make an investment and if you’re trying to earn a little extra money right now or for the future, then it’s worth doing.
Any investment comes with risks and so it’s good to know what is out there in terms of different opportunities and the risk that comes with each one. So if you’re wanting to invest as an investor in Germany, then here are some tips to get you started.
There are lots of different investment products and a few of these are essential to know about when it comes to picking the ideal product for you.You can check online for the best online real estate investing platforms.
ETFs
An ETF, otherwise known as an Exchange-traded fund is an investment fund that is traded on stocks.
It’s a great way to get into the investment of German stocks and of the two indices, there are twelve ETFs available for you to choose from.
By investing in an ETF, you diversify your portfolio some more and they’re pretty easy to trade back and forth. ETFs can be tax-efficient, which is something you want as foreigners in Germany and it can also offer exposures to equities, currencies and other assets.
The cons of investing in this type of product are that commissions can reduce the amount of returns, depending on the broker. Some ETFs can be taxed higher, so it’s good to look for the ones that are going to bring you the most profit.
Almost any German bank allows you to trade ETFs. You can also have a look at popular online brokers such as Flatex, Onvista and Degiro. Have a look at their conditions and compare their rates for the ETFs of your choice.
If you are just starting out with ETFs, investing in MSCI World or MSCI Emerging Market ETFs is a good starting point.
Sparpläne (Investment Plans)
Investment plans, known as Sparpläne are something to consider for a long-term investment.
Depending on how long you save for and the rates included with that particular provider, could see you turn your money into something more than what you would have made simply by storing it in a general current account.
Setting up a “Sparplan” is quite straight-forward. It’s like opening a bank account. Most Germans invest a minimum of 25€ per month into an Investment Plan that consists of one or multiple ETFs.
The difference between trading ETFs and using a Sparplan is that with the Sparplan you invest continuously every month or quarter rather than at once.
With low pay-in options, this type of investment can be great to start with when you’re investing in Germany. In fact, it’s the most popular investment product amongst Germans. Many Germans use this investment product as their financial retirement plan.
As far as the negatives go for this investment option, it’s not going to help you so much if you need money in the near future.
The market volatility too can mean you might end up buying higher units and then they drop in price.
Real Estate
Just like any real estate opportunity, a lot of research must be done as a foreigner to Germany. You might not know the areas so well and it’s therefore important that you look at the different places available where the property might be the most lucrative and profitable.
If you are looking to buy real estate as an investment you will need to look into smaller and less popular “B” or “C” cities as the prices in “A” cities such as Munich, Berlin or Frankfurt are currently at its peak. The return of investment in places classified as “B” cities is much better. Hannover, Karlsruhe, Leipzig or Aachen could be good options to consider.
P2P Lending
Peer to peer lending can be a great way to invest in Germany. With P2P lending, you invest in loans of other people and businesses. In exchange, you receive an interest that is often much higher than the return from real estate or ETFs, which is also the reason why P2P lending is so popular amongst Germans.
Head over to P2P Empire to learn more about the best P2P lending platforms in Europe. You can educate yourself about how the platform work, what’s the yield and the risk that comes with investing.
P2P lending is a great alternative investment as it allows you to create a diversified portfolio with a relatively small amount of money. On most of the platforms, you can start investing from only 10€. You can also invest in various loan types such as real estate, consumer loans or business loans to further decrease your risk.
Stocks
Stocks can be a handy way of investing in Germany and these do tie into the ETFs mentioned further up in the article.
It’s good to do your research on what stocks are available for that country and again to do your research into which ones perform the best.
The stock market has its advantages but when it comes to its cons, the market itself can be pretty volatile and so it’s important to know that as much as you can make money, you can lose it very easily.
The stock market is something you need to pay attention to constantly in order to not lose out.
You can buy and sell stocks with one of the German online brokers. If you want to save money on transaction fees, have a look at Revolut’s offer. Revolut currently offers the easiest and cheapest options to invest in US stocks.
Final Thoughts on Investing in Germany
It’s important to remember that there’s different taxes, laws, and regulations when investing as a foreigner and so it’s important to know the tax allowances you have available to you per year and any additional costs that might factor in how much you benefit in profits.
Be aware of everything from a legal standpoint as an investor. This is important to making sure you abide by any rules but still make money!
So with all this said, where should you start?
The easiest way is to invest in P2P lending as you can register online in less than 10 minutes.
You should certainly think about what future investments you’d like to make in the long-term but if you’re wanting to start profiting pretty quickly, then P2P lending is a great place to start. Consider all your options and invest wisely.
