ETF Investing is the most powerful way to build your wealth in Germany. And its also the most common way of Investing for People in Germany.
But how do you invest in ETFs? This is the guide that i wish i had when i was first getting started with investing. I’ve put a lot of useful stuff into this guide, and I’ll be sharing tips and strategies that most of you probably haven’t come across before so let’s jump right in.
ETF investing in Germany
Do You Need a Special Account to Buy ETFs?
Yes, you do, and its called a Brokerage Account or a Depotkonto in Germany.
For ETF investing, you first need to open a brokerage account. This is where your investments live. It’s like your bank account, but for stocks and ETFs.
Personally, I use Scalable Capital for my own accounts. But there are many other good options.
Related Guide: Trade Republic VS Scalable Capital
There are other popular options like Trading212 but these are international brokerage accounts. And the biggest advantage of using German Brokers is that they handle taxes for you automatically. You only need to provide your tax information and thats it.
No need to worry about taxes with the German Investing Apps. Let’s move to the next big question:
Which ETFs should you invest in?
There are over 12 thousand ETFs listed globally. Just to compare, there are about 55 thousand individual stocks in the world.
So the number of ETFs is about one fifth the number of stocks. That’s a lot. In that case how do you choose the right ones?
Here’s the key: You don’t need to look at all 12 thousand. Instead, focus on a few that match your personal investing goals. Let me explain.
What Are Your Goals with ETF Investing?
Ask yourself: Why are you looking into ETF investing? Are you saving for retirement and want long-term growth?
Do you want to receive income from your investments? Are you getting close to retirement and want something safer? Do you want to invest for 5 to 10 years and then use the money for something big?
Your answer helps you know what kind of ETF is right for you.
For example:
If you want long-term growth, look for ETFs with stocks that grow fast and maybe even pay dividends. If you’re close to retirement, look for ETFs that focus on bonds or more stable companies.
ETF Investing in Germany Based on your Age
Let me give you a list of the best ETFs based on your age. Here’s where it gets fun.
Scenario 1: You’re in your 20s, 30s, or 40s
You’ve got time on your side. This means you can be more aggressive. You can handle a bit of risk in exchange for the chance to grow your money faster.
Here’s how to find aggressive growth ETFs:
Some examples could be:
- Nasdaq – which tracks big tech names in the NASDAQ 100
- S&P500 IT Sector – which tracks the the US information technology sector
- iShares Core DAX – The DAX index tracks the 40 largest and most traded German stocks listed on the Frankfurt Stock Exchange.
These are built for people who want to grow their investments aggressively over time.
Obviously there are many other options which Ill discuss later in the guide
Scenario 2: You’re in your 50s and nearing retirement
Now’s the time to play it safe. You probably don’t want wild swings in your portfolio. You’re less focused on aggressive growth, and more focused on preserving what you’ve built.
So, you might want to look to add bonds or more diversified ETFs,
For example an All world ETF , in addition to an all market bond ETF.
Both are strong, stable options for someone in the later stages of wealth-building.
Let’s say you find a few ETFs that seem interesting. Before you invest, you want to research them a bit more.
That’s where ETF Fact Sheets come in.
ETF Investing: Reading Fact Sheets
These are pages that give you a detailed view of what’s inside each ETF
Let’s walk through how to find and read one. Perhaps you like the “iShares Core S&P 500 ETF”
How to Find ETF Factsheets
You can go to google and search for it directly. Click on the first non-ad result. That should take you to the ETF’s official page, often hosted by Xtrackers, iShares, or another provider.
ETF Factsheet Breakdown
Let’s break down what you’ll see.
Usually the first thing we have is the summary. This is usually at the top. It tells you:
What the ETF holds, What index it tracks, and its recent performance.
Let’s look at iShares Core S&P 500 as an example.
- It tracks the S&P 500, which means it holds shares in 500 of the biggest U.S. companies.
- Exposure to a single country and to large-cap companies
So right away, you know: this ETF gives you access to a wide slice of the U.S. market. But its not diversified in terms of location.
ETF Total Expense Ratio
This is very important. It’s the fee you pay to own the ETF. Think of it like a yearly service charge.
Lets say if an ETF has an expense ratio of 0.07%. That means for every €1,000 you invest, you pay just €0.70 per year. That’s extremely low.
Always check this number. High fees eat away at your profits over time.
If you find two ETFs that do the same thing, but one charges more go with the cheaper one (as long as quality is the same).
ETF Factsheet Performance
Here You’ll see how the ETF performed over different time frames, the annual and cumulative results over the past 1, 3 , 5, 10 years and Since it started
Don’t focus too much on the 1-year return. Markets go up and down quickly. What matters more is the long-term average.
For example, if an ETF returned 15% last year, that’s great but it doesn’t mean it’ll do that every year.
Instead, look at the 10-year average or the “since inception” return. That gives you a better idea of what to expect over time.
The Core S&P 500, for example, has averaged around 11% annually in the last 10 years.
ETF Domicile: Is it important?
Apart from the Expense ration, the Domicile is also important. Because the fund’s domicile determines:
- Which laws and tax rules apply to the fund
- How dividends and capital gains are taxed
- Whether it’s tax-efficient for investors in a specific country
- Which regulators oversee the fund’s operations (like the SEC in the U.S. or BaFin in Germany)
You might see two ETFs that track the exact same index:
- One is domiciled in the U.S. (like a U.S.-based S&P 500 ETF)
- One is domiciled in Ireland (like many UCITS ETFs)
Even though they follow the same index, the Irish-domiciled ETF is often better for EU investors due to more favorable tax treatment under EU tax agreements especially regarding withholding taxes on dividends.
Dividend Paying ETFs
But how do you know if the ETF provides dividends? Well this is usually described in the details as well. For example the S&P500 ACC ETF is accumulating meaning that the dividends are not distributed and auto invested. If you are looking for ETFs which give dividends, then look for DIST or distributing ETFs.
This ETF investing problem is Ignored by many Investors
Let’s talk about a problem many people don’t even know exists. It’s called ETF overlap. This happens when two or more of your ETFs own the same stocks.
Let’s say you own both iShares Core S&P 500 and iShares S&P 500 Information Technology Sector.
You might think you’re diversifying. But in reality, all the stocks from the IT sector ETF are inside the Core S&P500 ETF. So instead of spreading out your risk, you’re just repeating yourself.
Is ETF overlapping good or Bad?
It can be a good and a bad thing, it can be bad Because it defeats the point of diversification. If both ETFs own Apple, and Apple crashes, both funds will drop. You didn’t reduce your risk you copied it. But on the flip side, if you want to add more weight to certain companies like the IT sector in this example, you can easily do so.
Now that you know how ETFs work and how to research them, let’s look at some of the most popular and useful ETFs based on your personal goals.
You don’t need dozens of ETFs to build wealth. In fact, most people can build a strong portfolio with just 2 to 4 good ones.
Let’s have a look at some of the most popular strategies.
The All-World ETF Investing Strategy
I want a piece of everything. This strategy is perfect for people who don’t want to choose between countries, sectors, or regions. Instead, they want to own a slice of the entire global stock market.
The idea is simple: buy one global ETF that includes companies from all over the world large, medium, and small across both developed and emerging economies.
Example ETFs:
- Vanguard FTSE All-World – includes stocks from more than 40 countries.
- iShares MSCI ACWI – tracks both developed and emerging markets globally.
People like this strategy because It’s super easy. One ETF gives you exposure to thousands of companies worldwide. It automatically adjusts over time as markets shift. andi t’s ideal for long-term, hands-off investing.
This is a popular choice for anyone who wants to “set it and forget it.”
The 70/30 Split ETF Investing Strategy
Let’s balance between growth and stability. This is a simple and smart way to split your investment across two parts of the global economy:
- 70% in developed markets (like the U.S., Germany, Japan, UK), 30% in emerging markets (like China, India, Brazil, South Africa)
People select this strategy because Developed markets are more stable but tend to grow more slowly. Emerging markets are riskier but can grow much faster. By mixing both, you’re aiming to get a healthy balance of security and potential upside.
Example ETFs:
- iShares Core MSCI World – for the 70% in developed markets
- iShares Core MSCI Emerging Markets IMI (EIMI) – for the 30% in emerging markets
This strategy is for Investors who want a little more control than the All-World strategy as You can adjust the percentages if you want. Some people go 80/20, others 60/40 it depends on your risk comfort.
All Europe or All U.S. ETF Investing Strategy
Stick to what you know or where you live. Some investors choose to focus only on one region, usually because:
They understand the market better and trust the economy more. They also want to avoid currency or geopolitical risk
The all US strategy
Means putting your money into American companies only. As U.S. stocks have historically performed very well and include giants like Apple, Amazon, Google, and Microsoft. Investors like this strategy because The U.S. dominates global tech and innovation and The dollar is a strong global currency.
Example ETFs: iShares Core S&P500 ETF, XTrakers S&P500 ETF
The all EU Strategy
Focuses on European stocks only. That might include Germany, France, the UK, the Netherlands, and more.
Some people like this path because they are EU residents and want to invest “at home., want to avoid U.S. tax complexity or dollar exposure or believe in the strength and stability of the European market.
Example ETFs: iShares MSCI Europe UCITS ETF, Xtrackers STOXX Europe 600 UCITS ETF
Sharia-Compliant ETF Investing Strategy
Investing in line with Islamic principles. Some investors follow specific religious guidelines in their financial choices. For Muslim investors, that means making sure investments comply with Islamic law, which prohibits:
Investing in companies that deal in alcohol, gambling, weapons, pork, or interest-based banking, Earning income through interest above a certain threshold and High levels of debt in the companies being invested in
Whether for religious reasons or just ethical preference, many investors want to avoid industries or financial practices that conflict with their values. Sharia-compliant ETFs make that possible while still providing diversification, growth potential, and global exposure.
In German Investing apps, there are only 3 Sharia Compliant ETFs, The MSCI USA, Emerging markets and MSCI World.
Why You SHOULD Invest using ETFs
ETF investing doesn’t need to be complicated. The hardest part is getting started. After that, it’s mostly about sticking to the plan.
Start small, thats it. You can start with just 1€
Disclaimer: None of the content in this article is meant to be considered as legal, tax or investment advice, as I am not a financial expert or a lawyer and am only sharing my experience with stock investing. The information is based on my own research and is only accurate at the time of posting this article but may not be accurate at the time you are reading it.