The Easy Way to Invest Online in Germany | A Beginner’s 4-Step Guide

Trust me, I’ll be the first one to tell you that thinking about investing my money was definitely not the first thing on my long list of things to do before I actually got settled here in Germany. 

Why not? Well, I guess a lot of my excuses not to set up an investment portfolio was simply because: 

1. I’d never done it before 
2. I’d just arrived in Germany where everything is run in German (imagine investing in German?!) 
3. I never realized how much value something like this could have on my life 
4. The words “investment”, “stock”, or “trading” scared the sh*t out of me 

Fast forward to 7 years later (please don’t wait as long as I have), I’m kicking myself for not having done this sooner. 

I have the team at Iban Wallet to thank for finally reminding me to do something I’ve been wanting to do for years, and for sponsoring this info-packed post on how we as English speakers can invest online here in Germany.

 

First things first, did you know that there are almost NO savings accounts in Germany that can earn you interest?!

Many traditional German banks don’t often offer interest savings accounts, which as a North American, I was shocked. Back in Canada, I had always earned interest on the money I had sitting in my bank, even at the age of 2. In Germany, traditional banks aren’t focused on attracting new deposits which means offering high-interest savings accounts is not all that important to their business model. There are accounts like “Festgeld”, “Sparbuch”, and “Tagesgeld” but even in these accounts, the interest rates are so low that you’ll need to consider if it’s worth it for you as many of these accounts also lock your money in for a certain period of time.

So if I wasn’t earning on the money I had sitting in my German bank account, what was I doing? 

I was actually losing money by letting my money sit in the bank.

How? Well, if you choose to just let your money sit in a bank here in Germany, the general increase of inflation (the increase in costs per year) goes up and the money sitting in your bank can actually decrease in value. 

 

What is the benefit of investing your money?

If the sheer realization that you’re actually often losing money when putting your money into a traditional German bank doesn’t convince you enough. There are many other reasons why you and I should consider investing our money. There are also many reasons why investing your money now, even in the middle of a pandemic, might be a great opportunity.

NOTE: I’m not a financial consultant, simply an English speaker living in Germany who’s done a lot of research and asked a hundred questions. Please make sure that you do some thorough research ahead of time to figure out what options are best for you.

 

You can build more wealth 

If there’s one thing I’ve learned over and over again in my adult life, it’s that if you’re not willing to invest, you’re not ever going to have the chance to get rich quick. I’m referring to your personal life, your business life, and your financial life. You need to be willing to invest in your future in order to make potential significant improvements. 

It’s taken me 10 years of running my own business to finally figure out that I need to invest in my business in order to see any real change.

 

You can aim to achieve personal goals 

When I say personal goals, I’m talking about anything in life that costs money that you might need to consider planning for. Perhaps your child’s education? Paying off your mortgage? Vacation fund? Getting a dog? Any of these reasons may be enough to convince you to set up an investment portfolio.

 

You can plan for retirement

Investing a monthly sum into financial assets can help you plan for retirement. As long as your investments do well, you have the opportunity to gain more (potentially much more) than in a standard savings account. Iban Wallet, for example, gives you the possibility to earn up to 6% in annual interest. These are projections. Past performance is no guarantee of future performance.

This list could go on and on, but the biggest point to make is that without investing your money, you’re letting your money sit in a bank and actually depreciate in value.

 

So, how do you actually open an investment portfolio here in Germany?

I’ve got good news for you! It’s just as easy as it was for you back home because there are companies, who allow you to do all your investing in English! 

 

Step 1: You’ll need a bank account 

If you don’t already have a bank account (Girokonto) set up here in Germany, you’re going to have to do this first. There are many options to choose from, and tons of English expat favourites you can check out as well. Nowadays, setting up a bank account here in Germany can be done online in as little as 5 minutes, so this step will be a breeze! 

 

Step 2: Signup with an online broker (aka. depot)

An online broker is an online trading provider that allows you to open an account to build your investment portfolio. By doing this, you are then able to invest in ETFs, stocks, funds, and other assets (don’t worry, we’ll get to that shortly). You can remove your money, invest more money, pull out of certain stocks, and add more money to other stocks. 

NOTE: Iban Wallet services are not available in all countries, so if you hold a passport that is not German, and you’re interested in checking them out, you can find out online if you’re still able to open an account.

 

Step 3: Transfer some money from your bank account to your online trading account 

This doesn’t have to be a ton! On Iban Wallet, for example, you can start with as little as 1 Euro. You also have the choice to set up an automatic transfer (Sparplan) to transfer a set amount of money monthly from your bank account over to your online trading account. 

 

Step 4: Start investing your money! 

Here’s the part that always terrified me, until I had the team over at Iban Wallet actually explain it to me in plain English…

and believe me, it’s waaaaaay easier than you think it is. 

You don’t necessarily need to know which stocks are going to do well over the next 5 years or dive into some deep research on the best stocks at the moment. I mean, sure, you can if you’re ready to start getting more serious about the investment world. However, there are also many low-risk options you can consider that perhaps don’t necessarily require a ton of research upfront.

There are many financial investment assets you can look into including ETFs, stocks, certificates, bonds, options, futures, CFD, etc. However, for the scope of this blog post, we will just focus on ETFs and stocks. The other assets can often be considered higher-risk investments and you should make sure that you entirely understand the scope of online investing before getting started in any regards.

 

What are stocks?  

Stocks are referred to as an investment you make in a particular company and its profits. You as an investor would buy these stocks in order to hopefully earn some return on your investment. Stocks can be high or low risk, it is important that you do your research ahead of time before making any final decisions.

 

What are ETFs?

ETFs are exchange-traded funds which are a group of securities that are traded on stock exchanges. To me, that meant nothing. Try picturing it like this… you’re buying a goody bag of different stocks, rather than picking one particular stock. Essentially, you’re putting your eggs into multiple baskets to potentially diversify the risk rather than putting all your eggs in one basket (aka. one particular stock). These “baskets of shares” are often tracked on the stock market index and can go up and down as the stock market does.

It’s very important to know that there are different types of ETFs, some lower risk, and some potentially higher risk. Make sure you understand the differences before picking one particular ETF or stock and the suitability of an ETF or stock for your personal circumstance. I have not considered your particular needs and tolerance to risk while creating this post.

 

Ready to get started? Here’s some more information about Iban Wallet if you’d like to check them out! 

✓ When you sign up for Iban Wallet, you will immediately be able to open an Iban Account. It’ll take you less than 5 minutes. Remember you can try from just €1 and make a withdrawal whenever you need to.

✓ You can choose from a range of different products based on your personal situation and interests. 

✓ You can add funds quickly and safely from either your bank account (debit card) or credit card. 

✓ You can invest on the go with their user-friendly mobile app 

 

What are you waiting for? Have some more excuses? Any of these sound familiar? 

These are some of the top excuses from Iban Wallet users before they actually got started: 

• “But I don’t have enough money…” BUSTED: You can start with just 1 Euro.
• “But I don’t have the time…” BUSTED: You can register in less than 5 minutes.
• “But I don’t want to lock my money away…” BUSTED: You can choose to lock your money away for 1 day or up to 5 years! 
• “But the fees are going to be way too high…” BUSTED: There are no fees with Iban Wallet, unless you cancel a product before its term.
• “I don’t understand anything about investing…” BUSTED: That’s what the entire Iban Wallet team is there to help you with! 

Any more excuses? Let us know in the comments section below!