Investing advice for an expat in Germany

14 posts in this topic

I'm in my 30s and i would like to start investing so that i can have more financial security in my late 50s early 60s. I spent last few months investigating potential ways to do that and after reading many blogs, several books, consulting with friends and i reached some findings that i would like to share here for further analysis. But before that here are some info about me that you can use to have a better overview where i'm coming from
 
Some of my prerequisites
- I'm an EU citizen
- living and renting in Berlin(for about 6 moths)
- Married and both of us work
- Have no debt
- have savings to cover more then 1 year without a job
- saving 1/3 of income
 
Some of my requirements:
- long term is probably going to yield positive result :)
- doesn't require ridiculous start of investment like 100k euro
- don't mind ups and downs of investment
- is as simple as it can be
- has a return that can make me as financially independent as possible in my early 60s
- don't wont to jump in any debt if not necessary.
- doesn't require high amount of management
 
What i found is that investing in ETFs fits these requirements. Reading further i got an general idea of what products i would like to buy for my portfolio
- iShares Core MSCI World UCITS ETF USD: 90%
- Shares Core MSCI Emerging Markets IMI UCITS ETF: 10%
The portfolio to me seems to reach entire world and the TER is not that high 0.20 and 0.18, and also seems simple to manage, as the time passes I'll start looking into bond ETFs and maybe move there to have a bit smoother retirement ride. Any more advice on portfolio would be very helpful but my brain is already overloaded the last few months so simple products would be the best for me i think :).
 
BUT all of this in principle sounds nice but it's the operational part where I'm seeing a ton of stuff i still need to find out and that is where i need help and this seemed like a good place to ask some questions.
  1. Which Broker should i use: I've read so many reviews and forum posts that I'm getting information overload, so i'm asking for some help here, my needs are that i can get the ETF products that I mentioned i'm interested in(or something else if i get a better advice), that the service is in English(don't care so much about website but people that i can talk to), that is secure and reliable, that it provides me all the necessary documentation for tax purposes. From what i was looking online a lot of people in EU seem to use DEGIRO so i opened an account with them to check them out but i didn't buy anything yet. I summary i would really like recommendation on which i should choose and why
  2. Taxes in Germany: This is the part that scares me the most, i don't have a lot of experience with doing tax forms (where i'm from all was done by your company) and i based on everything I read about taxes in Germany it doesn't seem simple so my question is do you recommend getting a professional help for that and if yes do you know any tax company for expats in Berlin. Also from what i was reading is that if a broker is from Germany they will take do the taxes for me but when i was checking the popular German brokers none of them had an english version of the website so i'm not that happy with that.
  3. Should i look for financial advisor: do i need a financial advisor for my investment requirements, i would maybe ask for professional help for my investments but only for asking for advice not managing the money
 
 
I would be very helpful for an advice on anything that i wrote and i hope that i will be able to help somebody else in the future
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Why don't you apply the KISS- principle: Keep It Simple and Stupid? I gave this tip for free before: buy new ladies' panties, e.g. 3 pair for €5 and sell worn ones online for €20 each. Don't wash them. You do the math 👻.

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Good evening, acambas!

Worthy goals you have! May I also suggest you also (or first ) make sure you have the following risks in life organised insurance-wise?

Personal liability insurance- private Haftpflichtversicherung. Do you know what that is in a German context?      Income protection insurance--you have savings to cover one year without a job and save 1/3 of your income..what if you cannot work ever again or at least restricted in your money-earning potential because you have a terrible accident or illness?

I would recommend you bear those factors in mind and a professional advisor will hopefully stress those FIRST..

Savings/investments: it might be worth your while looking at the models the State encourage eg company-pension plans, generally known as Direktversicherung (with tax and social security benefits ) or a Rürup plan (pros and cons but highly tax deductible ) and in both cases you can choose your plans with equity funds...Emerging Markets or whatever you want.

And of course keep some money flexible in equities and bonds which you can access if you really need money short term.

I am a professional independent insurance broker and authorised advertiser. Contact me.
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The most simple way would be to buy shares of Warren Buffet´s company. True, they cost north of US$ 300000.- but there is a cheaper version for about US$ 200.-

They never pay dividends but reinvest all earnings. Therefore you won´t have to declare any tax unless you sell them again. Plus you´d get the world´s most successfull asset manager´s service for free (his record is 19% profits on average over decades).

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1 hour ago, jeba said:

The most simple way would be to buy shares of Warren Buffet´s company. True, they cost north of US$ 300000.- but there is a cheaper version for about US$ 200.-

They never pay dividends but reinvest all earnings. Therefore you won´t have to declare any tax unless you sell them again. Plus you´d get the world´s most successfull asset manager´s service for free (his record is 19% profits on average over decades).

 

Yeah, and he's almost 90 <_<. Great long term plan. Even he plans his inheritance to his wife to be invested in a SP500 index fund. I'd maybe buy one B-share in order to get their annual insights, and that's it.

 

Acambas, you have the right idea. Congratulations on your savings rate and go for it. In answer to your questions:

 

1) Onvista. They're currently the cheapest online broker  (tendentially no fees for monthly saving plans for private investors), are recommended by Finanztest and you have a wide selection of ETF's available. Flatex and a couple others are good alternatives.

 

2) Taxes are straightforward with ETF's as the bank must take care of everything for you. Don't let that scare you into inaction. The first €1602/year you earn from dividends are tax-free.

 

3) No  need. Read this book: The Investor Manifesto, by William J. Bernstein (you can find it online) and read the writings of Warren Buffet, also available online for no cost. Pick up a book by John Bogle and you're set.

 

Finally, consider the ETFs from Vanguard. After point 3) you'll understand why.

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Buffet / Berkshire Hathaway shares are hardly the best investment idea at this stage, but one’d know that only when selling... I like where MtBiking is suggesting. IShare ETFs have higher fees associated with them. I think the Vanguard ones are cheaper. But - yes, buying low cost, broad based index funds, covering multiple sectors would be the way to go. And, you want to get the low/no cost brokerage to get them...

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2 hours ago, Kavm said:

I like where MtBiking is suggesting. IShare ETFs have higher fees associated with them. I think the Vanguard ones are cheaper. But - yes, buying low cost, broad based index funds, covering multiple sectors would be the way to go.

Not sure whether you can still buy them as a German resident. See https://www.toytowngermany.com/forum/topic/382764-new-eu-regulation-preventing-purchase-of-etfs-and-etns/#comment-3736859

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9 minutes ago, mtbiking said:

Vanguard Deutschland, jeba, not America. They sell EU ETFS for the german market.

Interesting. Do you happen to know whether there is way to buy ETNs like e. g.  ISIN US90274D4328?

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7 minutes ago, jeba said:

Interesting. Do you happen to know whether there is way to buy ETNs like e. g.  ISIN US90274D4328?

 

I don't think that's possible with Vanguard DEU but to be honest I've never been interested in ETNs.

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Just now, mtbiking said:

I've never been interested in ETNs.

If you´re living in a country that doesn´t tax foreign investment income they have a big advantage: there is no US withholding tax. 

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1 minute ago, jeba said:

If you´re living in a country that doesn´t tax foreign investment income they have a big advantage: there is no US withholding tax. 

 

I live in Germany, so..

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7 hours ago, jeba said:

If you´re living in a country that doesn´t tax foreign investment income they have a big advantage: there is no US withholding tax. 

but @jeba, similar to derivatives (Zertifikate, in English also often labelled as "autocallable notes") where German investors fund out after Lehman  Bros' went belly-up that these bonds are at 100% risk of the issuing/underwriting financial institution/bank goes bankrupt. I would therefore only advise clients using such for monies they can put at such risks and when the investor has both the financial means and the investor-type-profile to stomach total loss of investment in the worst-case-scenario. 

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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10 minutes ago, Starshollow said:

but @jeba, similar to derivatives (Zertifikate, in English also often labelled as "autocallable notes") where German investors fund out after Lehman  Bros' went belly-up that these bonds are at 100% risk of the issuing/underwriting financial institution/bank goes bankrupt. I would therefore only advise clients using such for monies they can put at such risks and when the investor has both the financial means and the investor-type-profile to stomach total loss of investment in the worst-case-scenario. 

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

I know. In the case of the ISIN I mentioned the risk is even bigger as it´s a leveraged product. If the value of the "underlying" falls too far it will be dissolved and you get only a meager fraction of your investment back. A had to experience that before.

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