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How to Start Investing in Germany in 2021 for beginners – Bitcoin, Stocks, ETFs and Taxes

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Hi everyone and welcome to the complete beginner's 
guide to investing in Germany in 2021 i've made   this video from a beginner's perspective and it is 
catered for people living in Germany however can   be useful for people in other countries also in 
this video i will be talking about why should you   start investing where can you invest your money 
what are the different investing opportunities   like the stock market or in cryptocurrency what 
do you need to do in order to do that investment   i'll also talk about taxes and the risks involved 
in those investments and what has been my strategy   since i started investing in german so let's get 
started this video is going to be timestamped so   that you can go back and forth and revisit some 
topics which you found difficult to understand   i have also made certain detailed videos on the 
topics that i'll be discussing in this video those   videos will be linked in the description below if 
you're a student or a full-time employee or just   working in Germany in most cases you have your 
single account in which your salary comes you   go to the supermarket you buy stuff you use that 
account and then the rest of the money you keep as   your savings in your bank account i did the same 
thing when i came to Germany as a student i had a   blocked account i used whatever i needed the rest 
of the money was in my account after that when i   got a student job i was doing the same thing the 
money was in my account i was using it for my   expenses and then the rest of the money was always 
in my account later on i when i got a full-time   job i did again the same thing used my same bank 
account use my expenses and the rest of the money   was in my bank account and that was my saving all 
the time i sent some money back home bought some   savings bonds there but that wasn't enough as 
the gains were not that much and i kept most of   my savings in my bank account as most of you 
might know that in Germany there's almost no   interest rate and the money in the bank account is 
just lying there and it's being devalued because   of inflation in Germany there's approximately two 
percent inflation rate per year meaning that your   money loses 2 percent of its buying value every 
year it's always good to have certain cash ready   at hand however if you keep all of your money as 
cash it's losing its value every year and like   all of the rich people out there they are making 
their money work for them instead of the other   way around instead of keeping it in the bank and 
losing its value and as this past year has taught   us we need to have multiple sources of income in 
order to have some stability in our lives so what   can you invest in well traditionally most people 
would prefer investing in real estate however   real estate needs large capital and as an expat 
most of the people are not sure if they want to   stay in that same city for a longer time so they 
don't want to invest their time and their money   and buy a property stay there for a longer time 
it's also not worth the amount of effort as if you   buy a property and thinking that you can rent it 
out the rents in Germany are not that high and you   do not get a really good return on your investment 
as compared to other investments that are out   there you can invest in commodities for example 
you can buy gold silver other precious materials   however again there's this physical thing that 
you need to take care of if you have certain   gold bars you need to buy them and keep them 
in your safety deposit box or some secure place   so that is also another hassle then you can also 
invest in collectors items for example you can   invest in pokemon cards they have been really good 
investment in the past year however collectibles   are sort of a niche thing and the value for these 
collectible items goes higher and lower it depends   on the demand which is which is seasonal then 
comes the stock market which is arguably the   greatest wealth creating tool ever invented so to 
get started with investing in the stock market you   need a brokerage account or a depot there are many 
brokerages out there in Germany with which you can   sign up and start investing in stocks for example 
if you sign up with a german brokerage firm they   handle your taxes automatically and they send all 
of this information to the finance armed and you   don't have to worry about doing your taxes and 
if you sign up with a non-german-based brokerage   you'll have to do your taxes on your own now there 
are many options available for brokerages for   example trade republic etoro trading 212 scalable 
capital com direct and many more as i said the   biggest thing would be to open an account with 
a german brokerage firm as they will do all of   your taxes for that i would recommend either trade 
republic or scalable capital i've made a complete   step-by-step tutorial of how you can register 
with trade republic get your account activated   in this video i'll put that in the description 
below i've also made a step-by-step guide to   opening an account with com direct visual which is 
also in the description below here a big problem   arises not every brokerage accepts documents 
from every nationality for example trade republic   uses web id for their verification process 
and web id does not accept documents from   indian nationals among other nationalities so 
they cannot register with trade republic similarly   scalable capital uses post ident which 
rejects most of the applications from   other countries for example i've seen 
many people's applications get rejected   in scalable capital who are from pakistan using 
the pakistani passport so there is always an   issue of getting your identity verified which is 
based on your nationality some brokerages accept   documents from your country others don't so see 
if your country is accepted by that broker and   sign up there apart from being german-based or 
non-german based and the verification issues with   different nationalities there is also a fee aspect 
there are always fees associated with many things   for example with trade republic they charge 
you one euro every transaction so if you buy   anything or sell anything with them they charge 
you one euro however there are certain exceptions   for example creating a savings plan with them 
where you don't have to pay one euro every   time you buy or sell a stock or an etf more on 
that in this video with scalable capital again   you have certain limitations they have their 
tiered account you can have a free account   and two different premium accounts but the premium 
account you just have to pay their monthly rate   and you can have unlimited buying and selling 
free of cost with their free plan you have an   option of creating just one free savings plan and 
they've also introduced certain other ets where   you can also create a savings plan with them with 
trading 212 you can create an account very quickly   however there are bank charges associated so every 
time you buy anything there are bank charges in   addition to the brokerage charges so look around a 
little bit in detail and if you want me to create   a detailed comparison of these brokerages just 
let me know in the comments and i'll try to make a   video as soon as possible so once you've selected 
your broker you've made your account verified it   now comes how do you invest in the stock market 
well there are three main options number one is   stocks then is mutual funds and then etfs i will 
not go in details for mutual funds as they are   a bit more complicated and they are not in the 
beginners realm so i'll just discuss etfs and   individual stocks so what are stocks a stock is 
a security that signifies ownership in a company   and gives you a claim to the revenue and asset 
to that company an etf on the other hand is a   basket of securities which has a bundle of stocks 
together which signifies exposure to a certain   market segment or an index an example of single 
stock would be apple or tesla when you buy a   single stock of apple this signifies that you are 
a part owner of apple and you share on the profits   or the losses that apple incurs and that in turn 
is represented in the value of the stock and   an example of an etf would be snp 500 etf which 
tracks 500 of the biggest companies in the new   york stock exchange so what's the difference 
between a stock or an etf apart from it being   a single company and a group of companies well 
it's the risk that is involved with a single stock   the risk is concentrated to that company 
altogether so if there's increase in the   value of that company the stock value rises so 
does your profits however if there's a loss in   the company the stock value decreases and so 
does your stock value a great example would be   the wire card debacle that happened last year it 
was at 102 euros and then it went down crashing   to two euros one euro 0.1 and now people have lost 
all of their savings if they had invested all of   their money in just wirecard in comparison in etfs 
the risk is divided amongst the companies that are   a part of that etf for example in the s p 500 
etf the risk is divided among 500 companies   so even if one company goes bankrupt your stock 
portfolio does not lose that much and the etfs   remains somewhat stable so to summarize more 
risk more chances of reward and lower risk less   chances of reward so how do you find out which 
etfs are out there which stocks are out there   i've made a detailed video of how i do stock 
research i'll link that in the description below   when it comes to individual stocks most people 
prefer to buy stocks of companies which they   believe in and and have a certain information on 
on how this company works what's the philosophy   behind it if they're selling a product what's what 
are their products if they're selling a service   what's what is their service etc etc and in terms 
of etfs it's either a specific sector for example   energy sector information technology sector or 
an index for example the s p 500 or the core msci   world more details in this video some companies 
share their profit in terms of dividends they   share this profit monthly quarterly or yearly and 
there are some etfs that are also sharing this   profit so you earn some money monthly quarterly or 
on a yearly basis certain etfs do not distribute   those dividends however they accumulate 
it inside the stock value or the etf value   so they do not distribute it to the etf owners 
so now you have created your brokerage account   you have done your research you've searched few 
stocks or etfs which you are interested in but   you're still not sure if you want to invest your 
hard earned money and there's a higher probability   that you can lose all of your savings then i 
recommend registering with trading 212 as they   have this great feature of simulated trading 
in this simulated trading you get 50 000 euros   and you can invest this virtual money in a way 
that you would do with your actual money you can   virtually invest your money see how the stock 
market works which kind of etfs are there which   kind of stocks are available and once you're 
comfortable with investing this virtual money   you can open your brokerage account preferably 
with the german brokerage firm and start investing   in either stocks or etfs for beginners i 
would recommend that you start with etfs   as the risk is diversified and the number one rule 
for investing is diversify diversify diversify   and if you diversify your risk is distributed 
and you don't lose a lot of money if there's   a fluctuation in the market in this video i've 
shared four of my best etfs that i really like   and i have also invested with them apart from the 
stock market you can also invest in cryptocurrency   cryptocurrency is a digital currency which has 
no physical coin or a bill you can transfer   it to anyone without using a bank there are 
different kinds of cryptocurrencies out there   but the most popular ones are ethereum and 
bitcoin i've made a complete video describing   what cryptocurrency is and how you can 
buy cryptocurrency in germany in detail   link in the description again the cryptocurrency 
is very very volatile within the past few months   the value of bitcoin and ethereum has raised 
from 8 000 euros per bitcoin to 24 000 euros per   bitcoin so those are humongous amounts of profits 
with this profit comes a really high amount of   risk people who invested in bitcoin in december 
of 2017 they bought it at 19 000 euros per bitcoin   and in a couple of months in february 2018 the 
value of a single bitcoin went all the way down   to 4 000 euros per bitcoin so they lost a lot of 
value in their investment however if they kept   their investment and did not sell their bitcoin 
right now their bitcoin is at about 24 000 euros   per bitcoin for beginners i would not recommend 
investing in the cryptocurrency market but as an   option it is always good to diversify a little bit 
and as i said in my detailed video you only invest   the money that you do not need in the short term 
in the cryptocurrency market you invest in it and   forget about it so as everything else in germany 
there are taxes associated with stocks and etfs   there is a 25 capital gains tax on the profit that 
you get on stocks and etfs but that is only on the   capital gains that you get for example if you 
bought a single stock of apple at 100 euros and   you sold it at 110 euros the tax will be applied 
only at the 10 euros profit that you got not on   the 110 euros so you'll be paying 25 percent 
tax on this 10 euros and you'll also be paying   5.5 percent solidarity slag on top of it and 
this capital gains tax is flat for everything   it can be the profit on your stocks the dividends 
that you get from the stocks that you have   invested in or it can be the profit that you get 
from the interest that you get from the bank by   keeping your money in there however there is an 
exception to this rule and that is 801 euros can   be gained tax free per year for individuals and 
1602 euros can be gained tax free for married   or partnered people i have made a detailed 
video on this topic as well when it comes to   investment there are always risks involved and if 
there is a profit there is a risk as i mentioned   the example of wirecart people who invested in 
wirecard a couple of years ago they've lost all   of their investment in that company so there are 
many companies whose value increases and their   stock value also increases and there are companies 
whose value decreases and their stock value also   decreases for example in the dot-com bubble 
in the in the early 2000s many companies had   really high valuation and their individual 
stocks were being sold at multiple hundreds   of dollars per stock and then after a couple of 
years that bubble burst and all of that value   just came down crashing and and many people lost 
their savings similarly in the financial crash of   2008 the banking sector was hit that is why it's 
always recommended that you diversify and as a   general rule it is recommended that you don't have 
more than five percent of your portfolio value   in a single stock and don't have more than 
20 percent value in an individual sector so   right now the electric vehicle sector is booming 
the renewable energy sector is booming many people   have invested almost all of their money in that 
in that sector i'm not saying it's a bubble but   again with higher risks there's higher reward so 
just be careful that you don't invest all of your   money in a single company or a single sector 
so it's better to diversify and minimize your   risks so what has been my strategy since 
i started investing in stocks first thing   that i did was i opened an account with trade 
republic alongside with com direct and i found   that greater public had a better user interface 
it was quicker it was easier to buy and sell   stocks compared to com direct so i opened 
an account with them sticked with them and   i've been using them since a year now i found 
their user interface really easy really nice   looking and really good to use so after opening 
my account with them i started by investing in   etfs so initially i bought stocks from core msci 
world and msci world emerging markets along with   snp 500 and i created savings plan for these 
etfs and after a couple of months when i was more   comfortable with the stock market i started doing 
research and i started looking into individual   stocks and once i was comfortable enough i started 
investing in those individual stocks and along the   way i've invested in companies which have given 
me a profit of 233 again i've made a video on   that talk link in the description and i've also 
invested in companies which have lost its value   again wirecard uh i didn't invest a lot of 
money however i did have some losses in that   and with time i've been investing in certain 
really high risk company but i've also invested in   really strong companies which have been out there 
since many many years for example i've invested in   buyer i've invested in apple i've also invested 
in procter and gamble stuff like that my advice   would be to start with etfs and then when you're 
comfortable enough and you can do some research   then and then start investing in individual stocks 
many people don't have that much time or they   don't like tracking individual companies for them 
it's always better to just create savings plans in   etfs and and just keep on investing on in etfs i 
really hope that you like this video and give it   a thumbs up as it was a lot of work and i've put 
a lot of effort in collecting the information and   making this video and if you think that this video 
was useful for you and it might be helpful for   a friend or someone that you know i would really 
appreciate that you share this video with a friend   or a colleague and write down in the comments 
below if you need me to create another video on a   certain topic write down below if you have certain 
questions if you are confused with a certain point   i will try to answer them as soon as possible 
and as mentioned before i'm linking all of the   videos in the description below and hope you all 
happy investing until the next video Bleib Gesund!

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