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Savings & Investments Germany

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Hi All, 

 

I saw an old thread on this a couple of years ago, so things might have changes since then. 

 

A few questions:

1. Is there a similar thing to an ISA here in Germany? 

2. Are there any platforms which is safe for an investment a good interest rate? 

3. Any reccomended pension schemes I can start investing in now? 

4. Finally, do you need a finical advisor? 

 

Thanks a lot, I am really struggling to find good investment schemes in Germany. And considering opening another ISA in UK. Although I am a permanent resident here.

 

 

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There is nothing like the UK ISA here in Germany.

Unless you are resident in the UK you can't invest in an ISA there. 

 

Either you invest, and risk losses of course, or you accept basically zero return. Same as in every country since 2008.

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Right, with that in mind do you know of any of these platform web based options which are prima facie good value? 

Where one can spread the risk? I understand there is no ISA in Germany, but what are the other options? 

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If you want an easy online platform for investing here in Germany, I have an account with scalable capital, and found it very straight-forward. It costs next to nothing (off the top of my head, I think it is about 10 euros a month for unlimited trades). There are plenty of other similar platforms for Germany though (trade republic, etoro usw) and you can google reviews comparing them.

From the SC platform you can invest in many individual stocks/shares, commodities (also crypto currencies) and thousands of ETFs. 

To my mind there are three apparent downsides to scalable capital:

1) their prime funds (the ones they recommend) haven't performed that well. That is of course only a problem if you want to follow someone else's tips. However, from your messages, it sounds as though that may be precisely what you are after/need;

2) there is a lag of about two or three days between you transferring the cash into the platform and that money being available to invest. These days there is no real justification for that, other than that being one of the ways SC makes its money (sitting on deposits);

3) shares are limited to those traded on Gettex (which is still quite a lot).

So, now I'll end with the caveat that I'm not a financial adviser, and it sounds like that may be your best first step!

 

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Scalable here too, though I have no experience of any others. I set up a portfoilio with their wizard with a monthly payment as well as using the broker account to do things manually, split about 50/50. If you want the hands-off and relative "safe" approach then do the former. I think there's a lot to be said for the set something up and ignore it approach to saving. 

 

My first year in Germany I left a load of money in a savings account with 0.000000% interest. That was dumb.

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Hi, 

I am using https://www.fidelity.de/ and I am quite happy with them.

Basically they offer founds, so you choose one and you can deposit money automatically every month or manually when you want.

My experience (1 year) so far:

- decent return: 8% during last year ( 4th risk level out of 6, where 6 is the most risky)

- have 6 different risk levels to choose from

- but not easy to switch between them...in fact you need to contact them and ask them to do it. Its not designed to switch.

- not app to manage your founds, all is managed on their web portal

- good customer service

I hope it helps.

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1 hour ago, travelerworker said:

My experience (1 year) so far:

- decent return: 8% during last year 

But this is the consequence of how the stuff you bought have performed. Nothing to do with the broker itself.

 

Like saying "that car dealer is good, because the brand new Opel I bought there drives well". Had you bought the same brand new Opel elsewhere you would have paid the same, and it would alsodrive  identical. If there is any merit, it's not to the dealer.

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46 minutes ago, Gambatte said:

But this is the consequence of how the stuff you bought have performed. Nothing to do with the broker itself.

 

Like saying "that car dealer is good, because the brand new Opel I bought there drives well". Had you bought the same brand new Opel elsewhere you would have paid the same, and it would alsodrive  identical. If there is any merit, it's not to the dealer.

 

I know...but also its their decision on what to buy.

During corona times for sure they didnt buy airlines shares but switched to medical providers companies...so they affect the outcome.

anyways just sharing my experience.

also true that 8% last year could be 2% next

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I would rather say the decision was taken by you, when you decided what  to buy from the whole spectrum they offer.

 

And the whole spectrum they offer, is not really different from the one any of their competitor offers.

 

Plus, these days stuff is extremely positively correlated. So had you bought a random Acme fund, instead of the  Emca you randomly selected, your return would have been probably not very different. And if it did turn out different, nobody had any element to know this beforehand, so you could have just as well chosen randomly.

 

To the point, if a broker should be given merit or not, it should be based on how good and user friendly their website, how clearly they communicate, how fast their answers your questions, etc etc. For sure not on how the stuff you bought there performed.

 

Same as buying a new car. The car X is the same no matter where you buy it. So if you buy car X anyway, you choose the dealer based on how clear the guy communicates to you and how pretty his secretary.

 

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19 hours ago, Gambatte said:

I would rather say the decision was taken by you, when you decided what  to buy from the whole spectrum they offer.

 

And the whole spectrum they offer, is not really different from the one any of their competitor offers.

 

Plus, these days stuff is extremely positively correlated. So had you bought a random Acme fund, instead of the  Emca you randomly selected, your return would have been probably not very different. And if it did turn out different, nobody had any element to know this beforehand, so you could have just as well chosen randomly.

 

To the point, if a broker should be given merit or not, it should be based on how good and user friendly their website, how clearly they communicate, how fast their answers your questions, etc etc. For sure not on how the stuff you bought there performed.

 

Same as buying a new car. The car X is the same no matter where you buy it. So if you buy car X anyway, you choose the dealer based on how clear the guy communicates to you and how pretty his secretary.

 

well...I agree that a friendly platform, good communication and support and etc is important.

Just saying that the return is affected by how they manage the found.

So, this company as soon as corona started "rebalanced" my found to face that situation, lets say they did it on 1 March (just an example). As a consecuence the return was 8%. I received a communication saying that, saying: because of corona we are changing the composition of our portfolio to better face this situation, now will be bla bla bla

While company X maybe didint do it, or did it 1 of April, reacting late and missing an opportunity. Then company x found had a return of only 5%.

So this reflects how good they are managing the found.

The composition of the found, for a given risk level, changes quite often...maybe every 2 months or so.

So the car analogy is not quite right here...because they are investiment found and the portfolio composition changes between companies.

That is what I meant.

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Thank you all for your sound advice, it is nice to know that people on here are going through and researched the same topics. 

I will take the advice onboard. Maybe be back with more questions soon.

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Thank you all for your sound advice, it is nice to know that people on here are going through and researched the same topics. 

I will take the advice onboard. Maybe be back with more questions soon.

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On 03/10/2021, 21:25:34, Gambatte said:

Are you really asking on what to invest?🧐🤔

No I am asking where to invest. As I don't know the market in Germany and what you can and can't do despite stocks and shares etc. 

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On 03/10/2021, 14:42:13, dstanners said:

If you want an easy online platform for investing here in Germany, I have an account with scalable capital, and found it very straight-forward. It costs next to nothing (off the top of my head, I think it is about 10 euros a month for unlimited trades). There are plenty of other similar platforms for Germany though (trade republic, etoro usw) and you can google reviews comparing them.

From the SC platform you can invest in many individual stocks/shares, commodities (also crypto currencies) and thousands of ETFs. 

To my mind there are three apparent downsides to scalable capital:

1) their prime funds (the ones they recommend) haven't performed that well. That is of course only a problem if you want to follow someone else's tips. However, from your messages, it sounds as though that may be precisely what you are after/need;

2) there is a lag of about two or three days between you transferring the cash into the platform and that money being available to invest. These days there is no real justification for that, other than that being one of the ways SC makes its money (sitting on deposits);

3) shares are limited to those traded on Gettex (which is still quite a lot).

So, now I'll end with the caveat that I'm not a financial adviser, and it sounds like that may be your best first step!

 

Thank you! I am currently using trade republic.
Do you know of any websites / companies for pension schemes?

 

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My Scalable Capital account finally got setup today. So I looked at one company I was interested in, and it trades in the UK and USA, but not Germany. Therefore I was wondering which exchange would be the best choice? As the shares are listed in GBP and USD, you obviously have a currency risk, with either able to move against the Euro.

 

But I was wondering about the tax implications of UK vs USA. UK has 20% withholding tax, and USA 30%. Tax rate in Germany is 25%. Am I correct in thinking with the UK, it collects 20% and the German tax office the additional 5%? With the USA I'd have to somehow reclaim some percentage or register somehow to pay less than 30% withholding tax?

 

Update from SC:

Is it possible to be exempted from withholding tax in advance or to have it reduced? 
For US withholding tax, the custodian bank can grant a lower tax rate as a Qualified Intermediary. A reduction of the withholding tax from 30% to 15% is possible if you are liable to pay tax in Germany.

According to the double taxation treaty USA - Germany, the automatic reduction of the US withholding tax takes place for non-US persons with German citizenship, German residence and tax liability in Germany.

For foreigners living in Germany the legitimation has to be done by Form W-8BEN. To do so, send us the completed form via e-mail to service@scalable.capital. Please make sure to provide complete information when submitting the form.

If you are not taxable in Germany, the US withholding tax is regulated in the country-specific double taxation treaty between the USA and your tax country.

For all other countries, an advance exemption from the respective withholding tax is not possible.

 

So answer seems to be, buying US stocks is easy, but still not sure what happens with UK ones.

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@scook17

Not answering your questions, just some random thoughts from me. And I'm neither smart nor knowledgeable, apologies if I give the opposite impression (but I'm sure I don't).

 

 

4 hours ago, scook17 said:

So I looked at one company I was interested in, and it trades in the

You sure buying a single company is in your best interest? Not better buying indexes, like SP500 FTSE DAX whatever, that by their own definition have built-in averaging, smearing out the sharp fluctuation??<_<

 

You reside in Germany. Come on, Germany is big enough, sure there is plenty of stuff good for you to buy here, no need to buy abroad just because "this particular ONE company I was look at seems interesting...".

 

Good luck, and have fun too;)

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43 minutes ago, Gambatte said:

@scook17

Not answering your questions, just some random thoughts from me. And I'm neither smart nor knowledgeable, apologies if I give the opposite impression (but I'm sure I don't).

 

You sure buying a single company is in your best interest? Not better buying indexes, like SP500 FTSE DAX whatever, that by their own definition have built-in averaging, smearing out the sharp fluctuation??<_<

 

You reside in Germany. Come on, Germany is big enough, sure there is plenty of stuff good for you to buy here, no need to buy abroad just because "this particular ONE company I was look at seems interesting...".

 

Good luck, and have fun too;)

 

Well, as I understand it there are a few reason to own shares vs funds, but anyone feel free to correct me.

 

Firstly funds in Germany now have a perceived taxation due each year on the fictional increase in value of the fund. Shares only suffer from this at sale. Thus before the end of each year, you can realize 800 Euros of gains and still be within the tax limit.

Secondly funds actually charge a maintenance fee. With index funds this is usually quite low, but none the less adds up. Owning shares attracts no such fee.

Next if you want an index fund, you are stuck with the makeup of the fund, and you could largely replicate the fund by buying the largest shareholdings of that fund. Sure index funds like the FTSE100 require 100 shares, so are not easy to replicate due to the number of holdings.

When you select such a fund, it's boring, and you rely on the average to win out. For the most part it works quite well, but you learn nothing.

 

Yes, I have a few German shares in mind. I like to study companies before I select them. So I am happy to trust me, rather than pay someone else forever and gain zero knowledge/experience.

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