Author Topic: Where can a German get financial advice?  (Read 5640 times)

Cass

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Where can a German get financial advice?
« on: May 30, 2013, 09:14:27 AM »
After a few months of hanging around this forum and the personal finance subreddit, I've learned more than I'm ever going to need to know about saving and investing as an American. Unfortunately, most of that information isn't applicable to my own country -  there's no Roth IRA to max out, I don't think I can buy Vanguard funds, and on the other hand I just found out that there's some thing called "Entgeltumwandlung" I should have been doing for months, and some controversial thing called Riesterrrente I can't begin to understand.

Basically, I'd like to get the same sort of information that's constantly discussed on here - how do I invest, how do I make the most of my savings, how do I handle taxes, etc, in the same friendly, easily digestible format that information's presented on here - but tailored to Germany. Unfortunately, the articles I could find by googling mostly made my eyes cross, and of course there's a hundred books but no way to know which ones are worthwhile.

Are there any other Germans on here who know of good forums/websites/books, or at least have an idea where to start looking?

pom

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Re: Where can a German get financial advice?
« Reply #1 on: May 30, 2013, 10:48:23 AM »
Hi Cass,

I live in France so I can't help you with how to reduce your taxes but an alternative to Vanguard for Europeans is Lyxor. It has a range of low-cost index funds. I personally use their "Lyxor ETF MSCI Europe" the ticker in Germany is MEU.DE , my wife prefers to invest only in France so she uses their CAC40 fund. Both have annual fees in the 0.3%-0.4% range which compares well with what I am offered by bank. Can you imagine that HSBC charges almost 2% a year in fees!

They have a DAX fund: LYXDAX.DE that could be of interest to you. Annual fees are 0.15%.

Here is their german site: http://www.lyxoretf.de/

Other alternatives are Amundi and ishare, I believe that they also operate in Germany.

One point that you should be careful about is that some of the index funds are not traded much, some very specialized ones are a problem (for exemple their Euro-denominated Canadian fund LYXSPTSX.DE). That can make your life difficult if you want to sell and there aren't many buyer.

I don't know if you already have a brokerage account. I use ING direct because their fees are pretty low and they don't charge me for safekeeping of the shares. HSBC wanted 0.25% of the share value per year just to hold on to the shares for me ... No thanks!

Anyway my important point is that, in Europe, banks and funds often charge an arm and a leg for everything. You need to find a way to make your money work for you and not for them.

I hope this helps somewhat, hopefully someone here can direct you to good tax advice.

daverobev

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Re: Where can a German get financial advice?
« Reply #2 on: May 30, 2013, 11:05:20 AM »
Deutsche Bank do at least one no-MER at all ETF. In the UK it is... ahh.. well there are two versions, one that pays dividends and one that reinvests. XESX is the one I have (XESX.L).

Much of the same will apply - you should be able to find a 'discount brokerage' that will allow you to buy ETFs for a reasonable fee (ie, less than 10 Euro per purchase; ideally less than 5).

In terms of tax-shelters I have no idea. See what you bank offers - if you go to their savings page, for example, they will have a load of products. In the UK there is an "ISA" where you can invest more than 10k GBP per year (after tax) in stocks and not get taxed any further - no capital gains, etc. So on a British bank or building society you'll find "2% ISA, use your annual allowance before April!" etc - there may be something similar for you. From there - once you know the right term to search for ("ISA", "TFSA" for Canada, etc), you should be well on your way...

Deutsche Bank must know - as they sell the ETFs to middle brokerages, who then sell to you.

Here is their site for German ETFs - http://www.etf.db.com/DE/DEU/Pages/Home/29.html?blauswahl=1&strdisclaimerleverage=&strdisclaimereonia=&strdisclaimersonia=&strdisclaimerdirectreplication=&stinvtyp=privinv&stinvestortyp=privinv (or just go to etf.db.com).

Good luck!

Woody

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Re: Where can a German get financial advice?
« Reply #3 on: June 03, 2013, 01:38:06 PM »
Hi Cass,
well, I'm a German mini-mustache, who is at least striving for an early semi-retirement within the next 10 years. I think the German situation is not completely comparable to the US situation. What you can do, as MrMM suggests is:
* Reduce your spending e.g. but choosing your home related to your job wisely and buy (if required at all!) a used car. Use public transportation or bicycle if possible. At lot of hints of reducing your cost a applicable in Germany as well.
* Investing in index funds is possible in Germany as well and is really a good idea. The knowledge about this is rather low in Germany. The TER should be around or less than 0,5%p.a.
In my humble opinion the best starting point for German readers are the books by Gerd Kommer: Either the "Buy-and-Hold-Bibel" or "Souveraen investieren mit Indexfonds und ETFs". You can find both on Amazon. The tax aspect of these index funds can be discussed in forums like the wertpapier-forum.de. Me, I prefer mainly Comstage funds (just to give you an idea - this is NO recommandation - you have to decide on your own).
* I personally (again you have to find an own opinion) would not recommend using Riester or Entgeltumwandlung. Both support you during the saving phase by tax reduction, but this is rather a delay in tax payment since you have to pay these taxes back during the payout phase. This is all well and good, but the products you can choose from are mainly too costly. The nice benefits are mainly offset by these expenses. I would give you the advice to do the investment in index fonds on your own.
* Pay attention that the health insurance system is also different in Germany. It might be useful to keep a midijob (>450Euro) during semi-retirement. Otherwise your savings gains like interests and dividend will be taken into account to calculate your health insurance premium. This is a rather short explanation, I know, but the rules may change until you can retire early :-).
* If you would like to visit some websites, I would suggest, you take a look at those:
- der-privatanleger.de
- zendepot.de
Both are done by private individuals (so no interest in selling you into several product!!). The first one is a little older and deals with most of the ETFs asset classes you might be interested in.
The second one is a rather new blog. I really appreciate the way, information is presented there and a series about ETFs is about to start in the next weeks as the blogger just mentioned.

I hope these information help you to start your index investment. My recommendation:
* Start with one of the books. Read it twice.
* Read the blogs
* Ask within the mentioned forum, if questions remain. (Don't ask about early retirement there - in Germany this is not common idea and they will mainly say you are crazy ;-).)

If you have any specific questions, I will try to help you.

Best regards,
Woody

Christof

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Re: Where can a German get financial advice?
« Reply #4 on: June 03, 2013, 02:29:41 PM »
Another fund company that hasn't been mentioned yet is ETFlab (www.ETFlab.de) that has index funds with a very low yearly fee (0.15-0.3%). A blog that covers the generation of passive income is http://finanziell-umdenken.blogspot.de/.

Freestyler

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Re: Where can a German get financial advice?
« Reply #5 on: June 03, 2013, 03:29:21 PM »

I live in France so I can't help you with how to reduce your taxes

But you may help ME, that just moved to Strasbourg and I am totally oblivious to the French tax sytem ;-) In that regard also the fact that I am living 1.5 km away from the German border and not really that far from Switzerland, Luxembourg, Lichtenstein and the like make me wonder whether further tax arbitrages may be possible... Not asking for anything illegal here. Just not sure how much latitude I might have in establishing my fiscal residence (for instance) and how that would affect my finances. In parallel, they told me there are many things that are just way cheaper in Germany than in France. It would be difficult that they were more expensive, that I have to say.

There were some unsuccessful attempts to make sense of European Mustachianism in the "Investor Alley". The atomization of readers and regulations in the continent make that difficult.

GlobalStache

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Re: Where can a German get financial advice?
« Reply #6 on: June 04, 2013, 01:30:35 PM »
Hey Cass - I'll talk to my (German) husband and see what he recommends (he's out of town right now, or I'd just have him chime in).  He was like you...starting from the ground level with no help in sight.  He taught himself a lot, opened up to some friends who seemed to know some stuff and went from there (and has done great).  I'm not German, but have lived in Germany and am married to one...and your country is very DIFFICULT for those who are not born into wealth.  Everyone chooses in lock-step..."my parents didn't go to Gymnasium, why should I?". Ugh!  Okay, not "everyone" - there are exceptions like my husband (but he is the only one to move out of his small town, and he has like 25 cousins??, first to go to Gymnasium, university, etc.).  I don't understand why more Germans aren't more...entrprenurial??  And I don't mean in the sense of starting a business (heck, there's enough Mittelstand there for a whole continent!).  I mean more in the sense of fighting your way out of the family you were born into (assuming you're not already in the top tier financially).  If I can get some thoughts from my husband, I'll write again.  In the meantime, for a German I think you have already done the hard part...having an interest in a different path and taking the first steps in making changes.  Awesome and congratulations! - GlobalStache
« Last Edit: June 04, 2013, 01:33:21 PM by GlobalStache »

acj

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Re: Where can a German get financial advice?
« Reply #7 on: June 04, 2013, 04:17:08 PM »
Hi Cass, I guess Riester depends on your income and what youīd have to pay in order to get the state money. I think if u dont go with an insurer but rather with a bank you might have a chance of controlling costs (just look at it as getting 150€ interest a year). In terms of website there is a blog http://genughaben.de/blog/ which started out as inspired by ERE but now mostly focuses on permaculture...a few good financial articles remain though. Iīve never really found a decent German blog - I guess its because no one would ever post details about his financials so it all tends to be very technical. As Iīve left Germany for a higher paying, lower taxing country I havenīt spend ages looking for blogs though. What I do like and currently do is buying ETFs through comdirect - they offer a few without Ausgabeaufschlag. The downside is none of them are directly replicating the index, but thats a risk Iīm willing to take for now (and for the sake of simplicity I do not want to have more than one bank in Germany as long as my assets are below 100k€). Other than that I donīt do much investing currently as Iīm in the process of buying one or two apartments in Berlin. I do think that locking in low rates now and a possible (modestly) rising inflation in the future will benefit people that have debt.

@ Freestyler: donīt know about the French tax system but I talked to a colleague last week that lives in France and she said her tax bill went up by more than 50% compared to last year which is why they are thinking about moving to another country. Granted this couple is what is probably the top 5% of income earners but still. I think Hollande tries to squeeze out whatever he can from people that make decent money to compensate for a generally falling tax revenue. So if its the same for you you might wanna think about moving ;)

@ Woody: if only your dividends and interest are taken into account for health insurance I imagine the health insurance thing wouldnt be too bad... and even if you make massive amounts of interest you would only pay up until the Bemessungsgrundlage of something like 45k x health insurance %? Or am I missing something here?

Christof

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Re: Where can a German get financial advice?
« Reply #8 on: June 05, 2013, 03:40:46 AM »
Public health insurance has a minimum fee in Germany. You pay 15.5% of your total family income in the range of 898.33 to 3937.50 Euros. If you have a small business, the minimum income is 2021.25 Euros. That translates to monthly payments between 139 and 610 Euros per family (min. 313€ for small business owners).

Private health insurance is usually more, unless you joined very young and are single.

Freestyler

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Re: Where can a German get financial advice?
« Reply #9 on: June 05, 2013, 03:15:57 PM »


@ Freestyler: donīt know about the French tax system but I talked to a colleague last week that lives in France and she said her tax bill went up by more than 50% compared to last year which is why they are thinking about moving to another country. Granted this couple is what is probably the top 5% of income earners but still. I think Hollande tries to squeeze out whatever he can from people that make decent money to compensate for a generally falling tax revenue. So if its the same for you you might wanna think about moving ;)


Yeah, that`s pretty discouraging but I guess I more or less knew that and still have delusions that I will be able to somehow partially offset that... Spain is not much better, since you receive one of the highest taxes in the world on... really not much that income after all.

I can always move again though honestly thatīs the last thing I want to think about right now. We will see. My acquaintances here insist I would be no better in any of the surrounding countries. Iīd take that with a grain of salt though since most of their advice wasnīt that sensible thus far...

Christof

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Re: Where can a German get financial advice?
« Reply #10 on: June 12, 2013, 02:54:32 AM »
I just found out that there's some thing called "Entgeltumwandlung" I should have been doing for months.

You might want to start with this article (German) that discusses how Entgeltumwandlung nets less than saving cash for 1.75% interest.

Woody

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Re: Where can a German get financial advice?
« Reply #11 on: June 12, 2013, 05:08:21 AM »
Thanks for supporting my recommendation to rather ignore Entgeltumwandlung. Unfortunately Cass remains rather calm currently. Hard to tell whether any advice is still required/read at all.