Are you living and working in Germany and looking for investment advice? In this article, we’ll look at all the options you have to invest in a solid financial future—and what we think about them. 

But it can be challenging for expats in Germany to navigate the financial system when you don’t speak the language or understand the legal nuances.

With this article, our goal is to give you an overview of how to make smart long-term investment choices and help you make a clear-cut decision on what your next steps are—based on your situation.

The DIY route is scary, and you’re not quite sure who you should get your advice from.

At SageWealth, this is what we do—so we’ve got a pretty solid idea of how we can answer your questions:

• How do I know I’m making the right choices with my money? 
• How do I know I will get the returns I want from my hard-earned money? 
• How do I know my money is safe and secure, what kind of safeguards exist? 
• How do I make ethical and sustainable investment choices when living and working in Germany?

Let’s dive in… 

How to invest when living and working in Germany? 

Germany is a strong economy. It’s Europe's largest, most advanced, and is 5th worldwide by Gross Domestic Product (GDP). 

With access to global financial markets, Germany's investment options are as plentiful as beer brands. Germany's got everything, including funds, stock markets, bonds, commodities, real estate, and ETFs (Exchange Traded Funds).

Every investment vehicle has pros and cons—we explore these options by looking at how you can invest and save for a secure financial future. 

Investing always carries a certain amount of risk. So, we give you ideas on reducing risk while saving for your long-term future and life goals—like buying a house, raising a family, traveling, and retiring comfortably. 

After reading this article, you’ll have a better idea of the range of investment options in Germany. Including how to invest sustainably and how investment and pension newbies can get started.

5 Investment options in Germany 

Let’s take a closer look at the pros and cons of the most popular investment options on the market: 

• ETFs (Exchange Traded Funds)
• Savings accounts 
• Banks actively managed investment funds  
• Pension insurance 
• Real estate (as a home or rental property)

ETFs (Exchange Traded Funds)

ETFs (Exchange Traded Funds) are a basket of stocks and other investments. Instead of buying stocks, bonds, and other shares individually, you invest in hundreds in one click. 

Pros: 

• Diversified: No one should have their eggs in one basket. ETFs spread your financial risk, making them more secure because you can buy multiple shares, bonds, and other assets with one click. 

• Cheap: ETFs use algorithms to automatically adjust for risk and volatility, making them cheaper than other products on the market. Lower fees: More money for you! 

Cons:

• Complex: With so many ETFs to choose from (3000+), the mix of assets in a single ETF can be vast or complex—and some may contain risky securities that might not be so obvious upfront. That’s why investors will need to research what the ETF is tracking and understand the underlying risks. 

‍Greenwashing. One thing we hate and have gone to great lengths to avoid is investment greenwashing. In other words, investment funds or ETFs claim to be “sustainable” while investing in things like weapons, oil, and coal. It turns out that 90% of funds that claim sustainability are making the same harmful choices as everyone else.

That’s one of the many ways SageWealth and the ETFs we offer are different. 

ETFs are a great way to invest. However, there are a few things to consider: 

• How diversified are the investments in the portfolio? 
• How much am I paying in fees from the platform or provider selling me this? 
• How sustainable are my ETF investments? 

At SageWealth, we offer two ETF-based investment products, and everything in those ETFs are hand-picked by expert financial advisors. 

We’ve made ETFs better. More about that after we’ve explained other investment options in Germany…

Savings accounts 

Pros 

• ‍Popular: Most Germans don’t invest. Instead, they put money into savings accounts.
• Protected: European Union (EU) and German law protect bank account deposits up to €100,000 with the deposit guarantee scheme (DGS). German banks also have their own insurance and deposit protections.

Cons 

• Low-interest rates: Even a casual review of savings account rates (between 1.87% and 3%) shows that you’re not earning much for your money. You can earn more if you open a Fixed Deposit Account, although that means you normally can’t access any funds for at least 12 months.

• Taxes: You pay 26% in taxes for every Euro made from interest above the tax-free €1,000 allowance. It’s the same for other investments too, but it stings more if you’re only earning around 2% in interest!

Naturally, if you want to make more than a few percentage points in interest, it’s worth looking at other options.

Banks actively managed investment funds 

Pros 

• Lots of choices. Most banks offer investment funds. Kind of like ETFs, except banks have fund managers who look after the investments with the aim of making you more money than you put in. 

• Low-risk options. Investment funds, including those offered by robo-advisors and trading platforms, come in a wide range of flavors. There are low-risk products for those who want to make more than they could from sticking their money in savings, and there are more adventurous funds for those who are comfortable taking more risks. 

• Earn more than via savings accounts. You’ll probably make more than if you stuck your money in a savings account. That’s the idea, anyway! 

Cons 

• Where’s your money going? Especially if you want to make ethical and sustainable investments. Many banks claim to hit Environmental, Social, and Governance (ESG) criteria, but in reality, “Only 10% of German ESG funds shun controversial assets”, a practice we hate, known as investment greenwashing.

• “Independent advice” isn’t really independent. Let’s face it, “advisory calls” from fund managers and “independent financial advisors” are sales calls. Their business model is based on earning commission for locking customers in and then more money from selling “hand-picked” products. 

• High fees. If you’re looking to make a decent return on your investment, then expect to get stung with fees, especially hidden ones. Once a bank gets your money in a fund, it can be expensive to get it back out. Do your homework and read the terms & conditions (T&Cs) several times. 

Pension Insurance 

Pension insurance is a way of saving for your long-term future privately. Instead of relying entirely on state or employer pension contributions. 

We’ve all got to retire at some point. Start saving now, and you can enjoy a comfortable retirement; otherwise, you risk pension poverty; and no one wants that, not after a lifetime of hard work. 

The problem is, who knows how much they need to save? 

We’ve got an answer to that question: Try out our Pension Calculator today. 

Here are the pros and cons of pension insurance: 

Pros 

• Automatically saving for the future: Saving for a pension is a smart move. Having pensions insurance helps you stay on track. Everything’s done for you and runs in the background.

• Guaranteed income upon retirement until you die, plus any state-based pensions that will start getting paid when you retire.

• Tax-deferred: You don’t pay any taxes on pension contributions while you’re saving for one.

Cons

• Your money is locked away: Unfortunately, the downside of most pension insurance products is you can’t access any of your money until retirement. Unless you cancel the contract and then pay all of the taxes. So, if you need a cash boost for big-ticket purchases, like buying a house, you probably can’t get it back from your pension pot. 

• Inflexible, conservative portfolios: Pension insurance funds don’t perform as well as other options because they’re more focused on minimising risk than growing your money.

• High fees, hidden costs, and complex, hard-to-understand contracts.

• No inheritance rights: Upon death, any money still in your pension insurance fund goes back to the insurance company. So you can’t pass your wealth on. That’s pretty bad for those wanting to provide for their family and loved ones, and something that’s not always made clear within complex contracts.

• What am I investing in? Similar to funds managed via a bank, you don’t get much choice over what pension funds are investing in, and you’ve got very little control. If you want to make sustainable and ethical investments, then this might not be the way to go. Most pension funds invest in oil, gas, tobacco, and weapons. 

Real estate (as a home or rental property)   

Pros: 

• An important investment in a diverse portfolio. Once you’ve bought a house (well done!)—depending on your circumstances and life goals—you could make it a home or rent it out. Property behaves differently than other investment vehicles, which can help safeguard your long-term wealth. 

• Protected against inflation. Real estate is a smart long-term investment—house prices generally grow faster than inflation. As long as you keep up the mortgage payments, what you pay (minus interest) goes off the balance, giving you equity and financial security. 

• Less volatile than other investments. Germany has experienced a decade-long house price boom, with real estate prices only starting to fall in Q4 2022. Even with prices cooling, the long-term view on real estate is solid. It’s a lot less risky than other investment options. 

As most Millenials know, rent in Germany’s big cities is expensive. If you’re buying a house to rent out, mortgage payments are covered by rental income, and you should make a nice monthly profit too. 

Cons: 

• High upfront investment. Saving for a deposit time, especially if you’re paying rent and not earning much in a savings account. But, if you’re saving the smart way—investing your deposit in a high-growth account—then you should have more money quicker. Maybe even a bit extra for some fancy furniture!  

• Other costs. Whether you make a home for yourself or your family or are buying to rent, you’ve got to factor in things like repairs, fees when making a purchase (lawyers, etc.), taxes, and the cost of getting a mortgage. 

• Securing a mortgage. Depending on your circumstances — entrepreneurs/founders and freelancers — it might be harder to get a mortgage. You may need to jump through more financial loopholes than people on a salary. 

• Rental property income not guaranteed: Buying a property to rent doesn’t guarantee you’ll get an income from it. Tenants move out. Or, even worse, stop paying. It can take time, money, and legal headaches to evict. After that, you might need to fix the place up and then, finally, find new, more reliable tenants. Sounds like a nightmare! 

An easier way to get into property is through real estate investment funds. There are also ETFs that include real estate in the basket. The returns are very similar to owning property directly, without admin headaches and tenant troubles. 

If you think that none of those options sound right, then let’s see if there’s a better way to grow your wealth . . . 

Is there a better way to invest & save in Germany? 

Yes, there is. Check out SageWealth (that’s us!) . . . 

SageWealth: Design your financial future

SageWealth is a digital financial platform for sustainable, long-term investments. 

We are here to help anyone who’s got extra savings do something positive with their money—instead of it just sitting in a bank account barely earning any interest. 

Money is a powerful tool. When invested the right way, it can grow and help you achieve your life goals—whether that’s retiring early, buying a home, or donating.

One reason we founded SageWealth is that 92% of our generation doesn't trust banks and traditional financial institutions. Bankers don't understand our needs, and an “advisory call” is how they sell you complicated products that aren’t right for you, usually full of hidden fees. 

At the same time, most of us want to do something to protect the planet. It’s the only one we’ve got. We think Millennials should be able to fund their future with sustainable and ethical investments. 

With SageWealth, you can invest your money wisely, save for your goals, and protect the planet at the same time. 

Ready to snowball your wealth? Get a free financial plan from SageWealth: Book your meeting. 

Let’s take a look at SageWealth’s sustainable investment ETFs . . . 

SageWealth Stability ETF

ETFs are a great way to invest. SageWealth made them better. 

We ensure that your investment funds are never in one basket. We spread your investment across 10 ETFs, creating a more secure portfolio. Keeping your money safe, spreading it globally. 

SageWealth Stability is our lower-risk ETF product. Making it perfect for first-time investors. 

It’s also ideal for those making long-term plans—buying a house, having a family, or retiring. If you know how much you’ll need by a certain date, then it’s better to go for a balanced investment like SageWealth Stability. 

We’ve designed it with the help of an expert investment committee to give you better returns than saving accounts without the risk factors of more adventurous investments. 

Here’s a breakdown: 

• Average return (after fees)*: 3.5%
• 10-year (historic) returns: +97%
• Investment timescale: 3-7 years 
• Volatility: Low
• Emotional stress: Light

For everyone who wants to protect the planet while growing your wealth, rest assured that we hate greenwashing. 

Our ETF portfolios only invest in ethical stocks and bonds whose mission is to create a low-carbon future, such as green energy and sustainable food production. 

We have invested in some of the world’s most sustainable funds while excluding weapons, tobacco, oil and coal, gambling, and all of the other worst offenders. 

Plus, with 3,000+ ETFs on the market, we’ve saved you hundreds of hours of research so that you can start planning your financial future sooner—while making fewer mistakes!

Find out more about our investment portfolios and sustainability standards. 

* As with any investment vehicle or fund: Past performance doesn’t predict future growth. Investment returns can and do fluctuate over time. Target returns and estimated profits are only reasonable estimates.

SageWealth Growth ETF

SageWealth Growth is our more adventurous ETF. It’s perfect for investors who want to generate high returns and who are comfortable with more volatility to grow long-term wealth. 

Here’s a breakdown: 

• Average return (after fees)*: 7.0%
• 10-year (historic) returns: +256%
• Investment timescale: 7+ years 
• Volatility: High
• Emotional stress: Adventurous 

It comes with all of the same benefits as SageWealth Stability, including a diversified, sustainable portfolio, while aiming for larger returns for risk-friendly investors. 

* As with any investment vehicle or fund: Past performance doesn’t predict future growth. Investment returns can and do fluctuate over time. Target returns and estimated profits are only reasonable estimates.

Why should you invest with SageWealth compared to the other options? 

Here are 5 benefits of trusting SageWealth with growing your investment funds compared to the other options we’ve outlined . . . 

5 Benefits of investing with SageWealth

1. Personal service 

The SageWealth are your personal wealth advisors. We understand your financial needs and goals because we founded this company to solve the same problems you’ve got. 

You’ve worked hard for it. Now it should work hard for you. 

We believe your money should make your life goals achievable—save for the future, buy a house, retire early, travel, or donate. 

SageWealth provides straightforward English-speaking financial investment advice for anyone living and working in Germany.

2. Diversified, Sustainable, Secure portfolios

SageWealth investment portfolios include sustainable funds, real estate, infrastructure, bonds, and stocks in companies of every size

With guidance from Sustainable Market Strategies, leading experts on sustainable investments, we crafted ETF portfolios to meet the highest possible standards for sustainable and ethical investing.

We also adjust for risk and volatility through rebalancing and replacing ETFs if more sustainable and cheaper ones come on the market. Everything we do is to grow your long-term wealth while making a positive impact on the planet.

Most people ask us: “Is my money secure with SageWealth?”

Your investments are always secure. Even if SageWealth or Baader Bank went under, anything in your account is separate from either company. Banking regulations and EU law ensure that your assets are automatically transferred to a new security account in any bank you choose.

Plus, anything in your accounts is protected by the EU deposit guarantee scheme (up to €100,000). 

3. Save for your retirement 

Everyone wants a comfortable retirement. 

Long-term financial planning can seem scary. Especially if you’ve not thought about a pension and don’t know the best way to start saving.

Earlier on, we covered the pros and cons of pension insurance.

If that didn’t sound right for you, there’s another way: save money through SageWealth, grow your wealth, and use that money for your retirement.

You’re probably wondering, how much do I need to save to enjoy the lifestyle I want when I retire? 

We can help you answer that question. 

Find out how much you need to save to enjoy a comfortable retirement with SageWealth’s Free Pension Calculator: Invest sustainably with long-term wealth advisors. 

Try out our Pension Calculator today. 

4. Digital, faster, and more convenient

When searching for reliable financial advice, no one wants to phone, fill in forms, or book a meeting in a bank. It’s 2023, who’s got the time?!

But you don’t want to deposit your money into an app and hope for the best. 

Instead, get peace of mind and convenience with SageWealth, we’re only a video call or email away. 

So, we’ve made it easy: 

• Book an online/video meeting;
• Based on your financial goals, we’ll give you an actionable investment plan;
• If you want to go ahead, simply open your account online (it only takes 15 minutes);
• Put your plan into action with sustainable investments (Stability or Growth ETFs), and start paying into your account; 
• We will be with you every step of the way (ongoing support). 

5. Cheaper than traditional banks, no hidden fees 

Our fees are under 1% per year, cheaper than traditional banks, investment funds, platforms, and even robo-advisors. 

Plus, there are no hidden fees! You always know what you’re going to pay. 

Take a look at our pricing. 

Other benefits of investing with SageWealth include: 

• Security: As a regulated financial services institution, your funds are kept in individual securities accounts at Baader Bank for added security. All parties are regulated by the BaFin (Germany’s financial supervisory authority). Even if SageWealth or Baader Bank went under, your money is separate from either business's assets. EU law ensures that your funds will be automatically transferred to a new security account in any bank you choose. Your money is further protected by the EU deposit guarantee scheme (up to €100,000). 

• Cross-border. Your money travels with you. Even if you relocate to another European country (including the UK), you’ve got the same access. Keep growing your wealth wherever you go. 

• Flexible: Deposit and withdraw your money, increase or decrease what you pay at any time. 

• Affordable: Our fees are always under 1%/annually, half of what most banks charge. 

• Automated: Set up automatic monthly deposits and watch your money grow, stress-free. 

Get started today with a free financial plan from SageWealth: Book your meeting. 

In one call, SageWealth’s financial advisors will give you actionable advice on:

🎯 Your financial goals (traveling, financial independence)

🌿 Sustainable investing with ETFs & more

👵 Retirement plan

“Future you” will thank you! 

Wrapping up . . . 

And there we go, we’ve covered 6 ways to invest when living and working in Germany, including an overview of SageWealth (that’s us!)

SageWealth is a sustainable, hand-crafted investment platform created by expert financial advisors for anyone looking to save for their future goals while protecting the planet. 

We hope you’ve found this article useful!

Investing in Germany Frequently Asked Questions (FAQs)

How to seek investment advice in Germany?

Getting the right investment advice is hard for anyone who’s not born and raised in Germany. You need to understand the ins and outs of the financial and legal system. 

Banks, brokers, and financial advisors are all trying to sell you products they’re paid to promote. 

Friends and family probably know as much as you do. Not much, in other words. 

You could take the DIY approach, but who has hundreds of hours to search through thousands of financial products to find the right one? 

Make it easier: Book a call with SageWealth. We will guide you every step of the way. 

Invest sustainably with your long-term wealth advisors. Get started with a free financial plan.

How do I make sure my investments are ethical/sustainable?

SageWealth has gone to great lengths to ensure the ETFs we pick are the most sustainable on the market. 

Every investment meets exacting ethical and sustainability standards. Read more about this here, including our three core components.

In practice, and for financial nerds, this means we invest exclusively invest in Article 8 and 9 funds (according to the EU’s new Sustainable Finance Disclosure Regulation).

Are ethical/sustainable investments better than non-ethical?

Yes, they are. Based on “A huge scientific analysis of 2000 papers showed that returns from sustainable investing are higher 60% of the time; and 90% of the studies show no worse returns compared to traditional investing.”

For those who want to make a positive impact on the planet, “sustainable investing is 27x times more impactful than sustainable consumption.” 

At SageWealth, we hate investment greenwashing, so we only use the highest EU sustainability standards possible for picking what to include in our ETF portfolios. 

How safe are my investments with SageWealth?

As a regulated financial services institution, we don’t control your money. You can access or withdraw money anytime you want. For added security, your funds are kept in individual securities accounts at Baader Bank. 

Our legal processes are monitored by our partner, Bank für Vermögen. All parties are regulated by the BaFin (Germany’s financial supervisory authority).

Your investments are always secure. Even if SageWealth or Baader Bank went under, anything in your account is separate from either company. Banking regulations and EU law ensure that your assets are automatically transferred to a new security account in any bank you choose.

In addition, any cash remaining in your account is subject to the EU deposit guarantee scheme (DGS) (up to €100,000). For more information, please visit edb-banken.de

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_{Please remember, as with any investment vehicle or fund: Past performance doesn’t predict future growth. Target returns and estimated profits are only reasonable estimates.}

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