- Germany offers the complete range of investment options.
- Investment options in Germany are extremely varied.
- Traditional savings accounts are popular throughout Germany.
- Two categories are particularly interesting in Germany: real estate and stocks.
- Across Germany, there is a wide spread of real estate options.
- Most who wish to invest in real estate will use a real estate fund.
As one of the world’s leading industrialized nations, the Federal Republic of Germany offers the complete range of investment options expected from a developed economy. Not only, Federal bonds recognized for their safety and negative yields, but there is also a well-developed banking system, with the economy containing diverse global corporations and firms through the German stock exchange.
As a large Country, it offers a rich real estate market, from expensive city apartments, houses in the suburbs, and prefabricated buildings. There is a property for almost all budgets.
As a member of the Eurozone, involved, and dependent on the common currency, the Federal Republic is one of the world’s largest and most prosperous economic zones. So, finding the best investment in Germany should be taken seriously.
Investment Options In Germany
Investment options in Germany are extremely varied, and not all are beneficial. While institutions may buy German bonds to hedge their portfolio, private investors’ returns can be low.
Therefore, everyone has to understand what will be advantageous to their circumstances. Without understanding your situation, specific investments can not be discussed. But for the average investor, two categories are particularly interesting in Germany: real estate and stocks.
Traditional savings accounts are popular throughout Germany as it provides high security. However, the low rates of interest have destroyed profit opportunities. Even though the central bank has rethought this investment method, savings are still not overly profitable.
While low-interest rates have made it unadvantageous to save in your bank, it has made the successful approach of borrowing money and buying real estate. As prices of apartments, houses and commercial real estate rise, owners have made good profits and rental income yields.
Stocks And ETFs
Stocks and ETFs are the other investment options in Germany. Once neglected for fixed-income securities, their popularity has increased. DAX, established in 1987, introduced the population to stocks. Now firmly established, they can be traded through most financial institutions. EFTs emerged in 2008, and due to Germany’s strong developed economy, stocks have been relatively safe whilst providing good returns.
Real Estate Investment In Germany
For many investors, real estate has the reputation of being extremely safe and is called “concrete gold”.Not only was the purchase of your property a status symbols for the average citizen, but many private investors also considered the purchase of rental apartments to be a sensible contribution to wealth creation. With most rental properties own privately and not by professional real estate companies.
Real Estate In Germany
Across Germany, there is a wide spread of real estate options. The most expensive are in large metropolitan areas like Munich or Frankfurt. Here, even small apartments exceed 100000 Euros, with the house going into the millions, making it only possible to invest for those with large wealth.
Those not looking or unable to invest that much tend to consider cheaper real estate in rural locations, such as new German states, where it may be possible to purchase real estate for a five-figure sum! However, do this with caution as rental demand in these locations is lower, resulting in finding suitable tenants harder and a lower rental return.
The type of building purchased is less relevant. From houses from the Gründerzeit (ca. 1870) to new builds, the kind of property is less important than the location.
Commercial Real Estate Market In Germany
The commercial real estate market in Germany, however, differs. Most federal programs and tax benefits for the acquisition of residential property for private individuals do not apply to commercial real estate, and these are priced beyond the reach of the majority of individual investors.
Real Estate Funds
Most who wish to invest in real estate will use a real estate fund. These special investment funds invest the collected money exclusively in real estate. Real estate funds are highly regulated, reducing their tradability but strengthening the investor’s claim.
Overall, there are two variants. Open-end real estate funds are tradable but require investors’ holding periods and are commonly used to invest in a whole range of commercial real estate. On the other hand, closed-end real estate funds hold capital for a long time and tend to finance a single large project, such as a shopping centre.
Stocks And ETFs in Germany
Stocks and related EFTs are the best way to participate directly in Germany’s economy, not only in the automotive and machinery industries but Germany also has a wide range of financial, manufacturing and other companies.
Stock Investment In Germany
Whilst possible to invest in new and emerging companies in Germany, these are limited compared to other countries, with only a few outstanding tech companies available, like those that have recently driven the US stock market.
However, large companies hold a solid position and can appeal to investors who need security. High-risk growth stocks are rare, and those in Germany will not get around value stocks. Luckily dividend payments are much more common than with American companies with higher returns, up to 6-8%.
ETF Investment In Germany
You can buy EFTs to track German stocks, the best index being DAX, containing 40 of the most important companies in Germany. So an automotive and manufacturing EFT will focus on these companies while also including several strong financial stocks for balance.
Other EFTs focus on smaller companies and particular industries. However, you should check how their index is composed.
The Best Investment In Germany
The best investment in Germany is personal to each investor and only a decision you can make. However, our team is here to help and answer questions.