Need tips for investing in ETFs (Germany)

[jessika544]

Hello, everyone!

I am planning to start investing for my future and I am thinking that ETFs may be the way to go ahead.

Background - I am a Non-EU/Non US citizen. After several years of working, I have accumulated some cash but nowhere near enough to purchase a home in Germany and I am happy with just renting forever but I am very much interested in getting the best returns for my money and I would prefer a safer investment. I may do only one large investment €20K and I do not need this money for long-term (15-20 years). And may be also invest in ETFs time to time, through a sparplan or otherwise. Also I am currently with Sparkasse, so need to change my bank soon. I already have fund for emergency expenses. Also I am currently eyeing FTSE All world or MSCI ACWI.

I have a few questions and your help is much appreciated –

1. If I do not need to access my investment for at least 10-15 years, is it better to have accumulating or distributing ETF (for tax purposes).
2. What happens to my investment if I leave Germany? Can I keep all my ETFs here in investment account? In this case I may not use my investment account in Germany and probably won't do investment through this account but would prefer to leave existing investments till planned selling date here (at least 10-15 years down the line). Also investing in my home country is not an option because even if I leave Germany, I do not know where I would be heading next.
3. Relating to point 3 - Accumulating ETF would be helpful if I leave Germany right? Make re-investment easier.
4. Is it possible to change status of accumulating to distributing and vice-versa as you wish or i depends on the ETF and it is fixed?
5. Which broker is cheapest if I want to purchase 1-3 large ETF (E.g if I want to divide 20k sum in 3 ETFs) ? Current options are (since I also need to change my bank)- Ing-Diba, Comdirect, DKB, Onvista and Flatex.
6. Do pure broker banks like Flatex and Onvista take care of the German taxes?
7. I was thinking of going with Flatex, since their interface is in English but if I am only purchasing 1-3 ETF for long term, so not sure how much this matters. How good is Flatex? Are they good enough for single large purchases?
8. Out of Ing-Diba, Comdirect, Onvista and Flatex which is cheaper for FTSE All world Sparplan?

 

[mokinga]

@jessika544

If I do not need to access my investment for at least 10-15 years, is it better to have accumulating or distributing ETF (for tax purposes).

accumulating is better. set it and forget it. it reinvests itself automatically and there are no tax implications until you sell your shares.

What happens to my investment if I leave Germany? Can I keep all my ETFs here in investment account? In this case I may not use my investment account in Germany and probably won't do investment through this account but would prefer to leave existing investments till planned selling date here (at least 10-15 years down the line). Also investing in my home country is not an option because even if I leave Germany, I do not know where I would be heading next.

Afaik, you can just leave it. It depends on which country you move to and how they handle international holdings.

Relating to point 3 - Accumulating ETF would be helpful if I leave Germany right? Make re-investment easier.

It doesn't make re-investment easier. It makes it 100% automatic.

Is it possible to change status of accumulating to distributing and vice-versa as you wish or i depends on the ETF and it is fixed?

No, you'd need to sell this fund and buy another. Which would have tax implications.

Which broker is cheapest if I want to purchase 1-3 large ETF (E.g if I want to divide 20k sum in 3 ETFs) ? Current options are (since I also need to change my bank)- Ing-Diba, Comdirect, DKB, Onvista and Flatex.

Just compare the ones available to you. You'd want one with free monthly plans and the smallest transaction fees while still being a reputable firm.

Do pure broker banks like Flatex and Onvista take care of the German taxes?

You have to check with the brokers. Usually they report automatically to the tax authorities but it's your responsibility that everything is correct. Some prepare the documents for you but don't send them anywhere.

I was thinking of going with Flatex, since their interface is in English but if I am only purchasing 1-3 ETF for long term, so not sure how much this matters. How good is Flatex? Are they good enough for single large purchases?

For long term holdings it shouldn't really matter as long as the sevice itself is free (no monthly inactivity fees etc.), and transaction fees are reasonable. It seems good enough but I have no experience in comparing to other German services.

Out of Ing-Diba, Comdirect, Onvista and Flatex which is cheaper for FTSE All world Sparplan?

You'd need to check out the pricing fine print on all of them.

edit: just a few clarifications

 

[hutchison76]

@mokinga

accumulating is better. set it and forget it. it reinvests itself automatically and there are no tax implications until you sell your shares.

Not always. If you invest in a distributing fund, you can avail the 801€ tax free benefits in Germany.

On top of this exemption, there's also another one („Teilfreistellung“) where 30 % of capital gains are tax free if the investments are in stocks. So after doing the math, you end up with an exemption of 1144€ on dividends that you can leverage by investing in distributing.

And once you reach the upper limits of this exemption, which is approximately 57000€ assuming a 2% dividend on your investments (57000 *
2% = 1140), you can stop your distributing investments and open up a new accumulating ETF.

 

[mokinga]

@hutchison76 TIL.

OP take this into account!

 

[frannnie]

@jessika544

1. this is changing constantly. Some brokers have discounts for investing in some ETFs. But this can change at any time. For example with TradeRepublic you can invest into iShare ETFs for 1€ per trade. You can use this and move your portfolio once the discount ends.
2. you can compare and filter (all?) ETFs at justetf.com