How To Invest in Germany as an Expat

🇩🇪As long as you are residing in Germany, you can open up an account with Scalable Capital with your Passport and ‘Aufenthaltstitel’ and start investing:

When i came to germany in 2016 my grandpa told me when you’re abroad your money is your best friend manage it well my grandpa did not give me too many advices in my childhood or like even when i grew up but this one advice i really took to my heart and this is also the reason why we were able to buy a house when we were 24 and now i have a 50 000 euros stock portfolio

When i’m 25. now when you come to germany or you go to any other country you always do new things you buy new laptops new phones new shoes new jackets all sorts of stuff and you also prepare yourself to kind of adjust to the new culture because of course if you want to adapt and if you want to succeed in a particular environment you have to learn the new things and

That’s the reason when i was coming to germany i knew that like this is going to be a clean slate for me like i’m going to like build everything up from here and all of the new habits or any kind of new strategies that i want to implement i am going to do that here and i’m going to kind of try to put away the old mentality that we were having from the countries we

Moved from so in general i was really looking forward to creating new habits and i created some of them i started very simple i never spent money on new things i was always buying second-hand things like if you have watched any of my previous videos many times when i’m showing the apartment tour or something then you will hear that all right like this computer is

Secondhand this laptop is secondhand the table and some of the furniture all of that stuff even the chair which i was like you know working on that was second hand well actually this chair which i’m sitting on this is also second hand so this is how i was able to save up a lot of money and every single time i was saving money i was putting the difference that i

Did not spend in buying the new thing into a safe so in germany also you can have your schliswag you have a small safe there you can like put your money inside so i used to put the cash there so that i do not have access to it anymore and this is how we were able to like save money on the side alina was also like very meticulous with that we were like all right

Like you know once the taxes are paid and everything whatever we can save up to the side we are going to do that so that when the time comes we are able to use it in the right places the right time came in 2019 when we were 24 we were thinking about buying a house so we were like all right let’s take this leap of faith and let’s see like how things work because

We just wanted to try it out because we knew that this island it is a touristic place a lot of people come here to get married alina is also doing marriage planning now so all of those things combined together so that was our first big investment and this could only happen because we were saving money previously now when i turned 25 on first january 2020 i was

Like you know i’m not going to wait any longer because everybody in our home country so for example my parents they do not like believe so much into like stock market like in general like nobody that i met previously believed in like you know investing your money in the stock market or something and i was like you know doesn’t matter i’m spending money anyway

Sometimes like when you’re going out or something then i can like also just put this money aside and i can like try to start investing in stocks so first january 2020 i turned 25 i opened my depot and afterwards i started investing and in a few months because of my crazy like saving habits i have been able to create a portfolio of 50 000 euros because the thing

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Is if you think you will be successful in germany without managing your money like not just in germany in any country that will just not happen if you’re living from paycheck to paycheck or even if you’re a student right now and you’re getting your blocked account money and you’re spending all of it you’re going to be in big trouble because these kind of habits

They stick and once they stick they’re very difficult to change that’s why i personally find it is very important that you first start saving money to the side and then afterwards side by side also put some money out that you can start investing so that once you invest that money into the stock market you get some good returns now the one problem that most of you

Might know about germany is that germany has negative interest rates that means if you’re putting your money inside a bank if you’re leaving it in your current account whatsoever you will be charged with the negative interest rate that means the banks are going to charge you money instead of giving you money so that you are having the money in a bank account which

Sucks i know like coming from a country where you used to get interest rate when you were leaving the money in your bank account it is crazy like you know it was such a huge cultural difference how can banks take money from us when we are keeping the money inside so i tried to search for alternatives there was target scale control and physical conducive targets

Like a savings account the interest you get there is generally like very less you can take out the money any time from that account so that is why it is like so less and then you have the physical control which is a fixed deposit so inflation in germany is very low it’s like 1.4 percent compared to india where it was 7.66 interest that the banks are giving you are

Just around like you know 2.7 or something so i started reading and i learned more about the stock market and the more i learned the more i was confused like why would people ever think that stock market is something of a pure gamble because a lot of people back from the country i come from used to compare like almost like investing in the stock market to gambling

Which is really wrong because if you think about it in gambling like you’re just kind of entirely relying on your luck whereas if you’re taking a look at investing in the stock market you’re investing in real people you’re investing in real companies real products which gets sold and then afterwards the company generate returns and you’re investing in these people

And most of these companies are some of the hardest working and the smartest people available on the planet you can invest in apple amazon johnson johnson like so many other kind of companies and when you’re investing in them you’re actually investing in the people and the products so i was like you know it is highly unlikely that coca-cola is just going to

Magically disappear tomorrow so let me just take my chances and let me like start investing in their stocks so when you buy a stock you’re getting a part of that company you’re owning a part of that company and then that company on the basis of its policies can give you out dividends quarterly or monthly i started as a beginner and when i started i started by

Investing in the entire market so now you might be thinking how do you invest in the entire market you invest in the entire market by choosing some kind of indexes and you invest in the etfs the exchange traded funds one etf generally comprised of a lot of companies for example if you have the vanguard s p 500 one stock of that etf comprises of the 500 companies

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Stocks which are underlying that etf that means you get a small ownership in all of those companies now on the other hand let’s say you don’t want to invest only in u.s then you want to invest maybe just in the developed markets then you can choose an index like msci world what msci world does is instead of again like picking one company it distributes your money

Over 600 different companies from 23 different countries that means your risk of losing your money is very very low because even if one company screws up something wrong happens you still have all of these other companies which are making up for it now this is also very beginner friendly because you don’t have to wake up every single morning go to yahoo finance

Or something and read all of the financial reports and do all of that stuff no you just like create automatic savings plan and with that even with small amounts as less as 25 euros you can start investing in the entire market these indexes have given a return of anywhere from seven percent with msci world to 14 percent with the vanguard s p 500 in general etfs

Are very nice because you can also like sell them anytime your money is not restricted like you can get the money back anytime you want so of course this is very nice because if you think about it investing in one stock is like sitting on a round table with just one leg whereas if you’re investing in an etf you’re sitting on a round table which has let’s say 500

Lakhs in the s p 500 fund or 1 600 legs in the msci world index so like of course that is a lot more stable even if like one or two legs fall off now a lot of you might have already heard about the altars armored like how the pension that is like being provided in germany is not sufficient in many cases so like one in every five person is actually on the line of

Being in poverty at the older age and that is because the older generation is now much more in number than the younger generation that’s why the rent that the german state pays is somehow not sufficient which leads to problems so of course you have to be super careful about these things you’ll be an old man or woman sometime in the future and at that time the

Income that you will have will not be the same the things that you will be able to do will not be the same and also the diseases unfortunately like they always just like increase with age that’s why it is super important that you start taking care about these things at least as soon as you come to germany so that you have your investments working for you do not

Wait till the time you get a job and stuff because then you again are missing out on two very important years of your life where you can be getting compound interest because you’ve invested in these etfs now to give you an example if you come to germany as a student of age 24 and start investing 50 euros a month you invested for the 43 years till you hit retirement

You will have 148 666 euros out of which 25 800 euros would be the money you paid in 122 866 euros will be the interest you gain because you started so early now what happens if you skip on the two years while you’re studying and instead of saving the 50 euros you’re spending it in places where you do not need that money in that case the final amount that you

Get in your retirement while investing in etfs is going to reduce from 148 666 euros to 128 766 euros now even though the difference of the money that you invested is not that much you invest for example 50 euros a month you invested for two years so you have 1 200 euros of difference just because of a gap of two years you have lost almost 20 000 euros that you

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Could have gained extra in interest at your retirement now if you’re living in germany doesn’t matter if you’re an international student a professional or a resident who is actually living here you can easily open a broker through which you can start investing in stocks or etfs and one of the affordable and very expert friendly brokers is scalable capital and you

Have a very nice app where you can see all of the stocks and index funds and everything in detail and the nice thing is the cost in germany brokerages charge a lot of money like they charge anywhere from four euros to one euro whereas scalable capital they are just charging 99 cents for every single trade you make so if you buy or sell something you just have

To pay 99 cents nothing more but if you set up automatic savings plan then you do not have to pay anything at all on the first etf so for example you’re saving the core msci world which i have saved and i have around i think 200 shares or something of that and you can run these payment plans without any kind of additional cost completely for free every single

Month with as little as 25 euros the first thing you can do is you can go ahead make a depot for yourself right now you can like sign up with the link given in description with scalable capital and you have a 25 euro sign up bonus which is going to be your one month amount for the savings plan that you will get completely for free just by signing up for them now

The important thing to remember is that this offer is available only till 31st october so you have to open your account before that but anyways it is better that you open up your account till let’s say next friday because next friday there is going to be another finance video so that i’m able to teach you a lot more about how do you manage your finances in germany

Because right now there are so many channels which talk about like studying in germany and like you know working in germany and everything but somehow everybody misses out on the bigger point which is when you come to germany you also have to be able to handle your money better and you have to learn how to invest and there’s a reason why most of the successful

People and smart people have always been investing in other companies and you should be one of those people too so from my experience i will be teaching you in the upcoming friday videos on how do you invest in etfs in the next video we are going to see how do you start your savings plan in scalable capital so till that time make sure that you have your account

Opened it is really simple you just go to the link in the description you fill out the form and then afterwards you get your identity verified by postcedent you can directly do the post island from your home in just like 2-3 minutes and everything is done and this entire process of opening the depot with them costs absolutely nothing and it can be done in just

Five minutes so i personally don’t see a sense why you should like go out and like waste some more money instead of start saving for yourself because when the old times come it is always better to have some kind of like extra money saved on the side instead of thinking about maybe i should have started with this earlier i’ve also compiled a lot of information

About investing in my free pdf investing 101 in germany with the link given in description so do homework open your depot before next friday and the second one take a look at the pdf i’m going to see in the next one you

Transcribed from video
How To Invest in Germany as an Expat By Bharat in Germany!