How To Start Investing In Germany In 2024 With Trade Republic
Sign up here to get a 15€ worth of stocks when you create a Trade Republic account.
Before 2020, I was confused when reading stock market reports about my favorite tech companies or looking at the stocks app on my phone. Today, I still don’t have a complete understanding of how exactly does the stock market work, but I gained enough confidence to start putting my savings into it. And I’m not the only person to do the same. The pandemic came with a surge of retail investors who, while being stuck at home, gained a better understanding of the stock market, how it works, and how they can profit from it.
With the inflation rates worldwide going up, more people are turning towards investing instead of holding onto cash. Luckily, getting started with investing in the stock market has never been easier, even in infamously bureaucratic Germany. Here’s what you should know to get started.
Please note that this is not financial advice, and the article is for entertainment purposes only. I’m only sharing my personal experience.
Saving plans and ETFs
Before I started investing, I had a skewed understanding of it. I thought it required a lot of time, beginning at the right moment and depositing a lot of money. All of that is wrong.
“Investing can be as simple as paying for Spotify.”
With saving plans offered by apps like Trade Republic or Scaling Capital, you can select an amount you’re willing to invest regularly. Trade Republic lets you start with as little as 10€ per month (without additional fees). All you have to do is set a monthly transfer to your deposit account and set up a saving plan.
But how do you know where to invest? Researching and keeping track of individual companies can be very time-consuming. And in case you pick wrong, you can end up losing a lot of money. That’s why ETFs (Exchange Trade Funds) are a great option.
ETFs track specific sectors, commodities, or index funds like S&P 500. Instead of buying individual company stocks, you invest in many at once. If one company fails, there are many more that can keep the ETF in good shape.
Can I just save my money instead?
If you don’t feel comfortable about investing at all, you can use Trade Republic’s savings account instead. All cash that you deposit in Trade Republic but not invest into any assets will earn you 4% annually. For example, if you have deposited 10,000€, you would earn 400€ — just for having your money in the Trade Republic account. The earned interest is automatically payed out to your account at a beginning of each month. You also have an option to transfer the money back to your bank account at any time.
Use the Trade Republic Card
While celebrating their fifth birthday, Trade Republic has announced the Trade Republic Card that on paper sounds like a fantastic addition to the 4% saving account.
First, the card lets you earn 1% Saveback on card payments that will go towards your saving plans. It maxes out at 1,500€ spend, giving you 15€ back.
Second, similarly to saving features in other banks, the card lets you round up your card payments and invest the spare change. For example, if you spend 9.49€, you will invest 0.51€ into a pre-selected stock or ETF. You have an option to pick the spare change multiplayer — 1x, 2x, 3x, 5x or 10x. For example, if you pick 5x, you will invest 2.55€.
The best part? The Trade Republic Card account is completely free.
- Free virtual card;
- No monthly subscription fees;
- Unlimited free ATM withdrawals worldwide above 100€;
- No foreign transaction fees.
The optional plastic card comes with a one-time 5€ fee. And the stunning stainless steel mirror card will cost you a one-time 50€ fee (and yes, I got it).
To get the card, you have to get on a waitlist and you will need an existing Trade Republic account. If you don’t have one, sign up here to get 15€ worth of stocks.
How do capital gain taxes work in Germany?
In Germany, capital gains from shares at taxed are 25%. When I was thinking about starting to invest, I was anxious about the bureaucratic details and dealing with all the documents. In reality, taxes are simple, especially with Trade Republic and similar services.
Trade Republic will calculate your due taxes and pay them for you when you sell shares from which you made a profit. You get an invoice for every transaction, so you know exactly how much you had to pay.
Trade Republic also lets you set your annual tax exemption on capital gains. If you’re single, it’s 1000€. For married couples, it’s double — 2000€. Any profits under that are tax-free.
Can I invest in crypto too?
Trade Republic lets you invest in cryptocurrencies, but it doesn’t let you have your own crypto wallet with your access keys. It’s a good option if you want to use cryptocurrencies as an investment, but it won’t work if you want to use it for anything else. For example, you won’t be able to transfer your coins to another wallet or purchase NFTs. For that, you can use Coinbase or a similar service.
It’s worth mentioning that in Germany, if you hold cryptocurrencies for over a year, profits that you make are tax-free. Is also applies to indirect investing (like with Trade Republic).
Where should I go next?
Investing can be very confusing. Rapid changes in the market can cause a lot of anxiety. Even though you don’t have to dedicate a lot of time to investing, staying up-to-date with what’s happening on the market is worth it.
I subscribe to Graham Stephan on YouTube. His channel is primarily US-focused, but he has a lot of great insights and tips regarding investing. I also recommend joining /r/finanzen and /r/eupersonalfinance on Reddit.
If you’re looking into ways to save money daily, check out my articles about credit cards in Germany:
Sign up here to get a 15€ worth of stocks when you create a Trade Republic account.
