How to start investing in Germany?

Why invest at all?

The main purpose of investment is to earn money for a carefree old age. The fact is that in Germany the pension is financed by current employees. That is, you pay for someone's pension from your salary, and even now this funding is not enough. Since the German population is constantly aging, it means that when you retire, the size of the pension fund will be even smaller. Therefore, you should not fully rely on the state pension. The sooner you start investing, the more your investment will grow.

What are the types of investment?

In this article, we will look at two main types of investing: stocks and real estate. By investing in shares, you become the owner of a small share of the company with the expectation that the company will grow and, accordingly, the value of your share will also rise in price. Also, some companies annually pay dividends to shareholders, that is, part of the company's profits in the form of income to shareholders. If you invest in real estate, then you, as a rule, also count on a long-term increase in the price of your property, as well as monthly profitability in the form of rent (or its savings if you live in the purchased housing yourself).

Where are the best assets to invest? Stocks or real estate?

Nobody knows. Firstly, it is not known how much specific shares or real estate will cost in 5, 10 or 30 years. Secondly, stocks and real estate are very different, so a generalized comparison is impossible. Here you should rather rely on what is closer to you in terms of lifestyle. If you are ready to deal with the hassle associated with the acquisition and maintenance of real estate and you are not embarrassed by an impressive amount of mortgage debt, then real estate suits you. You can start investing in stocks as early as 20€ and it's quite simple and doesn't take much time.

So how to get started investing?

First of all, I recommend opening a Tagesgeld account and setting up Dauerauftrag from your salary account so that a certain amount is automatically deducted from each salary, which will be directed to investments. How much is up to you. I recommend 15% of salary. In the following article I tell how to start investing in stocks in Germany.


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