Should I invest to Commerzbank Mutual Funds or Exchange Traded Funds (ETF)?

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Hello,

 

I work in Germany for a few years (and I don't speak German - sorry) and save 10 thousands of Euros in my Comerzbank's account. 

Recently, I got contacted by the bank employee to invest the whole money to their mutual fund with low-risk tolerant plant for the next 3 years. The problem is the money is kept in the

bank for nothing as I don't get any interest.

 

I tried to read the proposal and researched about mutual fund and it shows that it cost a lot of money for the first load (like a few percents of

total investment) and the cost of maintaining yearly by the fund's manager. In total, I'm not sure it is worth it to invest in the mutual fund as I will need to pay more money and tax from capital gain yearly if they could invest well (if they fail to gain money, I still need to pay the fee).

 

On the other hand, I read about  Exchange Traded Funds (ETF) and it costs tiny for buying (few Euros/transaction) and I'm not an active trader so I will not sell them until next 3 years. However, the risk is I don't know which ETF to buy for a good profit (5% / year is good enough) and I'm not sure Commerzbank has the online platform to allow me to buy ETF and sell them whenever I want.

 

Do you have any experience with it? Please share your opinion.

 

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Normally in Germany the banks will try to sell you shares all the time.

 

The Bank sellers get a list of shares they will push each couple of months, some people think they push theses shares because its more in the interests of the bank than in the customer.

 

Having said that, I know people who have been happy to follow the banks recommends, because they made money and I know people who were un-happy, because they lost money.

 

Generally, its a good idea, to keep the financial advice as for away from the buying side as possible, for example the if the bank makes money on you buying a share ( or whatever ), then its in their interests that you buy from them.

 

Always try to get independent advice and then buy separately, to keep the banks independent advice as independent as possible.

Trouble is you might have to pay for truly independent advice.

 

You should also bear in mind that stocks have been going up ( generally ) since 2008 ( last finical  crash ) that's a long time in the stock market - and some people thinks its time for a correction - not to say it will happen.

 

Problem is, its your decision and you take the win/lose, from what you do. Its much easier just to let the bank do it and hope it goes up.

 

 

 

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Hi there, 

I've also recently moved to Germany so I thought my experience could be helpful - I am not a financial advisor. 

Before moving to Germany, I lived in Croatia, and the options that banks there were offering were not suitable for me because of the huge fees, and brokers demanded at least a 10.000 investment, which was too much for me.

A good solution for me was ETFmatic:
https://etfmatic.com/

They mostly work with Vanguard ETFs, and that's the only real bummer - you can't choose which specific fund the money is invested in, you just choose the country/territory/stock market. For example, if you want to buy US stock, they have Vanguard's S&P 500 that you can invest in. They also have some options for buying bonds (depending on how old you are, this might or might not be relevant for you). 

Your portfolio can be in euros, pounds or dollars. You can use a SEPA transfer or debit card to fund your portfolio. They are based in the UK, so Brexit is another risk to factor in.

The fees are 0.5 percent of your total investment yearly, on top of the fund's own fees, which does add up, but for us it was definitely worth it. Last year we achieved around 4 percent after fees, which I'm happy with since the timing of our investments was totally random, we just set aside some money from every paycheck and we experimented a lot with different products. 

ETFs have really low fees, so the total yearly fee (ETFmatic + ETF itself) is something like 0.6:
https://support.etfmatic.com/hc/en-gb/articles/115000614683-What-are-the-total-all-inclusive-fees-

We are really happy with this so far because they are transparent and easy to use.

I hope this was helpful! Good luck with your investments!

Cheers, 
Jelena

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I asked similar question end of last year though I could not use any professional terminology.

My bank contacted me last year and asked me to join some investment plan with 0 risk.

So I asked on this forum if there is any investment plan with truly 0 risk. People's response were, no, any investment has risk.

So I decided not to join, because it could mean too much distraction.

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The first consideration should be ... would you be fine loosing that money? How risk averse are you?

 

Another important consideration is, what would happen if you should have an emergency of some sort and need money quickly. A general recommentation is to keep 5-10k on the side for emergency expenditures.

 

An all world ETF would be my pick. Nothing too specialised if you are not into betting.

 

Wertpapier Forum is a good German forum on such matters.

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3 hours ago, Chris Marston said:

The first consideration should be ... would you be fine loosing that money? How risk averse are you?

 

Another important consideration is, what would happen if you should have an emergency of some sort and need money quickly. A general recommentation is to keep 5-10k on the side for emergency expenditures.

 

An all world ETF would be my pick. Nothing too specialised if you are not into betting.

 

Wertpapier Forum is a good German forum on such matters.

 

It has to be quantified, and find expected profit.

 

ExpectedProfit  =  PossibleProfit X ProbabilityForThePossibleProfit  - PossibleLoss X ProbabilityForThePossibleLoss

 

If the value is positive, it is worth of investing.

 

But who bank would give such probabilities!

 

 

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It is kind of like, if you don't play the lottery, you can't win.

 

Invest what you can afford to lose. Each time. I've had some losses over the years but the gains have outweighed them by far.

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1 minute ago, fraufruit said:

It is kind of like, if you don't play the lottery, you can't win.

 

Invest what you can afford to lose. Each time. I've had some losses over the years but the gains have outweighed them by far.

 

So the expected profit is postive.

 

May I ask, how much by percentage was a typical gain?

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In this moment, my highest gain is 363% (mutual fund) and my lowest gain is 1.58% (stock).

 

My highest loss is running around 62% (GE) but I haven't lost anything as long as I don't sell. Same with the gains.

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For me a bank selling shares (of anything) is an inherent conflict of interest (no pun).  Use your bank for savings and checking...period.

 

Do research on fund management companies and ask them what they would recommend given your modest amount and expectations and goals.  Compare their responses to each other and determine which suggestions come closest to your needs.  Remember, past history is no guarantee of future performance, but if you do end up investing in an index fund, you'll have the satisfaction of knowing you are not alone in its ups and downs.

 

In any case, if you buy now, you are buying near all time highs.  I would be inclined to wait for a substantial drop in whatever fund you plan to invest in.  You state you plan on needing these funds 3 years from now....that may be about the time for a market low.  Buy high-Sell low is not a profitable strategy.

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27 minutes ago, catjones said:

Buy high-Sell low is not a profitable strategy.

No shit.

 

How and who determines what is "high" and "low"? You can't time these things. No one can, despite the claims.

 

There are stocks/assets which are (let's say) €100/piece at a certain time and people don't buy because it's at or near an all time high, only to see 2-3 years later that the same stock/asset is worth €300/piece. They then wish that they had bought in at €100/piece.

 

Same goes for buying low. A stock was worth €100/piece at one time, but is now worth €20/piece. Sounds like a great buying opportunity, so you buy in at €20, only to see it drop to €1.27/piece 6 months later.

 

Real Estate in Munich is a prime example. If you bought real estate in 2010, when prices in Munich were already high, you hit the jackpot. People were convinced of a real estate price correction. Hasn't happened yet, has it? I'm sure someone on here will reply to this with "It will happen. Look at this fancy graph/data", or some non-sense economic theory to back-up their prophecies).

 

Time in the market vs. Timing the market and all that.

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It doesn't matter if a stock costs $3 a share or $3,000. It is only the percentage increase that counts. 

 

I played with the "penny stocks" for a while years ago. There is usually a reason why they are so cheap.

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6 hours ago, aries6 said:

No shit.

 

How and who determines what is "high" and "low"? You can't time these things. No one can, despite the claims.

 

There are stocks/assets which are (let's say) €100/piece at a certain time and people don't buy because it's at or near an all time high, only to see 2-3 years later that the same stock/asset is worth €300/piece. They then wish that they had bought in at €100/piece.

 

Same goes for buying low. A stock was worth €100/piece at one time, but is now worth €20/piece. Sounds like a great buying opportunity, so you buy in at €20, only to see it drop to €1.27/piece 6 months later.

 

Real Estate in Munich is a prime example. If you bought real estate in 2010, when prices in Munich were already high, you hit the jackpot. People were convinced of a real estate price correction. Hasn't happened yet, has it? I'm sure someone on here will reply to this with "It will happen. Look at this fancy graph/data", or some non-sense economic theory to back-up their prophecies).

 

Time in the market vs. Timing the market and all that.

 

If you're going to criticize my statements, at least read and (try) understand them first.

 

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10 hours ago, fraufruit said:

It doesn't matter if a stock costs $3 a share or $3,000. It is only the percentage increase that counts. 

 

I played with the "penny stocks" for a while years ago. There is usually a reason why they are so cheap.

I´m not talking about penny stocks. I´m talking about stocks that used to have a high price but are now worth much much less. Like your GE stock which is now down >60% since the time you bought it. When it was down 50%, you might have thought that it´s a great time to buy more, only to see it further slide down in price. 

 

Most of the time you don´t know what is high and low and all the analysts forecasts on stock prices is useless crap. I own Daimler stock (which I bought at around €70). At the time, Commerzbank (where I have my account) had a "sell" recommendation on Daimler. The stock initially went up to about €75-76. I could have sold it and made a small profit, but the stock did have a price of €90 a few years back, so I got greedy and waited for it to go up to €90 and then I'd sell. With the Trump tariffs, diesel scandal issues and Brexit, the stock price slid all the way down to almost €45 over the last year. Commerzbank still stuck to the "sell" recommendation. I didn´t. The stock is now back to almost €60. It still has a "sell" recommendation. I´m not selling as I think it will eventually go back higher to the point I´ll be able to sell at a profit.

 

Unless you are Warren Buffett or some investment genius, there is not much "strategy" to implement with investing. It´s all down to luck.

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7 hours ago, catjones said:

 

If you're going to criticize my statements, at least read and (try) understand them first.

 

You wrote that you would be "inclined to wait for a substantial drop...".

My response to that was you don´t know when and if at all there will be a drop, never mind a substantial one. The price could go even higher. You have then missed out on a potential gain because of a wait and see approach.

 

Those who were waiting in 2010 for a "substantial drop" in the real estate prices in Munich have now been priced out.

 

"Buying low and selling high" is not a "strategy", it´s stating the blantantly obvious.

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2 hours ago, aries6 said:

I´m not talking about penny stocks. I´m talking about stocks that used to have a high price but are now worth much much less. Like your GE stock which is now down >60% since the time you bought it. When it was down 50%, you might have thought that it´s a great time to buy more, only to see it further slide down in price. 

 

You can be sure that I was adding to my position on the way down. Otherwise it would be down even more. And I'm hanging in and sitting on it. Not really hoping for a profit but a much smaller loss would be nice.

 

Sometimes a "sell" recommendation is just a rating that means "don't buy". You hang in there.

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1 hour ago, fraufruit said:

Sometimes a "sell" recommendation is just a rating that means "don't buy". You hang in there.

...and that reenforces my point of trying to time the market or to build strategies.

 

In January 2019 Daimler was trading at €45 and commerzbank rated it as "sell" (i.e. don't buy). If one had disregarded that rating and had indeed bought in at that price, they would be sitting now in April 2019 (4 months later) on a sweet profit of about 30% as it is now trading at €59.

 

Nothing has changed between January and April. Brexit is not resolved, the diesel scandal and related lawsuits are still going on and Trump´s trade war is raging as usual. Why the stock price has shot up between January and now I have no clue. 

 

Were the people who bought in at €45 smart investors and those who didn´t not so smart? No. They just got lucky if they had.

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I don't know how close to retirement you are. I was always in for the long term investing but did take some money off of the table over the years for things like buying a car, etc. I guess I've been in the game for about 45 yrs. now. It has taught me patience for sure.

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8 minutes ago, fraufruit said:

I don't know how close to retirement you are. I was always in for the long term investing but did take some money off of the table over the years for things like buying a car, etc. I guess I've been in the game for about 45 yrs. now. It has taught me patience for sure.

I´m 41, so about 25 years away from retirement. I just got into investing 2 years ago, so a newbie.

 

(Corrected my age from 42 to 41. Geez. My braincells are slowly dying).:huh:

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