INVESTING 101

Investing in Germany for

Beginners

By Bharat Chaudhary
Entrepreneur
 CONTENTS
T A B LE O F
1 Investment Timeline - My Investment Journey

2 Lesson 1 - Popular Opinion

3 Story Time - A Journey of Two Friends in Germany

4 Lesson 2 - Different Savings Option in Germany

5 Lesson 3 - The Real Game Changer: What Makes all the

Difference

6 Lesson 4 - Why You Should Consider Investing

7 Lesson 5 - The Golden Rules of Investing

8 Lesson 6 - Investing for Beginners

9 Lesson 7 - How to Start a Savings Plan

10 End Note - Conclusion

If you look for money-saving tips online, the
internet will show you a countless number of
blogs from bloggers across the world. Some of
them might be from students and some might
be from actual professionals with real-life
money-saving tips. When it comes to saving
up, there is actually no need to look that far.
Just ask your parents how they saved money
as a student and how they are saving money
now. Many people think about saving money
as a grown-up thing. Let me tell you one thing-
people who say that saving money is a grown-
up thing are downright stupid. I'm pretty sure
that even as a kid you had a piggy bank in
which you put all your coins and notes and
picked it up multiple times during the week
impatiently to check if it is becoming heavier. I
know I did that. Would you believe me if I told
you that some of my friends and cousins were
able to increase their savings by a small
portion? Some people are just smart when it
comes to saving money. Even as kids, some of
my friends and cousins had worked out the
thinking that money doesn't increase if it is
sitting ideally in a piggy bank. There are ways
to increase it. The strategy those little smart
heads followed was to lend money, more
specifically small changes to their parents and
grandparents and take it back at a small
interest. By doing this they were able to gather
enough money to purchase their favourite toys
or games. There are many ways in which you
can save money and simply putting it aside,
though good, is not the most efficient way. In
this PDF I will share with you some of the smart
ways of saving and investing money.
 Investment Timeline

Starting
Came to Germany for
Studies
No Job
No Savings
Age - 21

Start of Studies
Bharat Chaudhary
M.Sc Internationales
Wirtschaftsingenieurwesen
Technische Universität
Hamburg
Started with Masters
at TUHH
Started working as a
working student at
Alina started full-
time employment
Age - 22

Founder: Bharat in Germany (BiG)

Career Start
Started with Self-
Online Broker: Scalable investment
Started with serious
Capital
saving
Age - 23
Current investment portfolio:
50k Euros

Major Update
Investment in
Business coach
Bought a house
Launched the Course
Saved Money for
investing in stocks
Age - 24

Investment
Started investing in
stocks
Age - 25
 LESSON 1
POPULAR OPINION

Common thinking process

Most people I come across say that savings is easy and

investing is hard. What I've observed with most people is

that they would rather spend 100 € today than being

able to spend 200 €, 3 years from now.

Sacrifice now or sacrifice tomorrow: The choice is yours

This has more to do with behaviour and I will explain

how. As a child, your parents must have told you that

you can either invest a few years in studying sincerely

now and sacrifice a few things like playing with friends,

going out and playing video games during this time to

enjoy your life to the fullest when you've made a name

of your own, or do all of these things now and not focus

on your studies only to suffer later when things become

hard.

Doing more today or tomorrow

The same thing is applicable for parents who can either

spend the first few years of parenting teaching good

things to their child so that the child becomes a

responsible adult or forget their responsibilities as

parents now and take on the role of being parents in

their old age when their kids are unable to look after

their kids leaving the entire burden on them as

grandparents.
 LESSON 1
POPULAR OPINION

The bitter sweet thing: Time

The pendulum of time is always swinging between

sacrifice today or sacrifice tomorrow. If you sacrifice

today, your tomorrow will be better. If you sacrifice

tomorrow and enjoy today then you will sacrifice even

more tomorrow and in the future.

Following the rules but not the herd

In my research and opinion, investing is easy because

for investing you just have to follow some rules and

following rules is not hard. But before I explain how

investing works, it is important that you understand

and are aware of all the existing options when it

comes to doing something with your money. What

better way to start other than with a story.

STORY TIME
JOURNEY OF TWO FRIENDS IN GERMANY

Coming to Germany
Once upon a time, there were two friends, Sam and
Tim, who came to Germany in 2020 for their masters.

Making Smart Decisions

Both of them were smart and knew how important it is

to save money. They wanted to make smart decisions

with their money, therefore both of them started saving

money from the monthly payouts of their blocked

account. Both saved 50 € every month from their

blocked account.

The 50-50 Rule

Tim saved 50 € per month and put it aside in a separate

account. Sam also saved 50 € per month but he invested

50% of it, that is 25 € in ETFs. At the end of their studies,
they found jobs and went their separate ways. But they

never stopped saving at least 50 € per month. They did

so consistently for 43 years.

Meeting Old Friends

They met again after 43 years when Sam invited Tim for

his retirement party. After a few beers, they started

discussing about their retirement plans. Sam told Tim

that he plans on travelling the world with the money he

has accumulated on his investment.

STORY TIME
JOURNEY OF TWO FRIENDS IN GERMANY

The Person Who Saved Money

Since Tim was proud of his consistency with Saving

since University days he asked Sam how much he had

saved besides his pension contribution

The Smart Person Who Invested Money

Sam told Tim that by investing 50% of his savings in ETFs

for 43 years he has saved a total of 74332 € till now

including his university savings.

Saved More But Earned Less

Tim was surprised because he had saved 50 € per month
since university and at the end of 43 years he had saved

only 25800 € in comparison. Tim wanted to know what

Sam did differently because he was sure that both of

them had been saving the same amount of money since

University.

Saving vs Investing
Sam told tim that since university he had been saving

50€ per month and putting aside 25 € per month in

ETFs. By investing half of his savings in ETFs he had

earned compound interest on the money he had

invested for 43 years. He said that he started when he

was 22 years old and now when he is 65, he has

74332 € of savings plus his pension contribution!

But of course he did his research before starting is

investment journey.
 LESSON 2
DIFFERENT SAVINGS OPTIONS IN
GERMANY

You are reading this e-book because you are interested in profitable

investment options. Therefore I assume that you come here with the mindset of

saving money so that I dont have to explain exactly why and how important

saving is.

I will straight away get to the possible saving options that exist for you in

Germany:

Girokonto or current account

Sparkonto or savings account

Tagesgeldkonto

Festgeldkonto

Depots

Let's start with the list and I will tell you some details about all of these options.
 LESSON 2
DIFFERENT SAVINGS OPTIONS IN
GERMANY

Girokonto
A Girokonto is your current account with a german bank in which you receive

your blocked account money (as a student), your salary or any other income

that you might have. This is also the account through which you do your day to

day transactions. In some countries, banks give interest on the amount in your

account on a yearly basis. But do you know how much you get in Germany?

Well, to be honest, it's not much. The interest rates are within the range of 0.01

- 1.00 %, which isn't much if you take into consideration the inflation rate, which

was 1.35% in 2019 according to Statista.

So even if you are saving more money every month, your money is ultimately

losing value if it is sitting in your bank account.

Sparkonto
In theory, a Sparkonto has a higher interest rate than a Girokonto. There is no

overdraft facility available for a Sparkonto and the sole purpose of such an

account is to deposit money with the intention of saving. Additionally, there is a

limit on the amount and number of withdrawals per month.

 LESSON 2
DIFFERENT SAVINGS OPTIONS IN
GERMANY

Tagesgeldkonto
Many Expats and students living in Germany usually dont know about the

Tagesgeldkonto. A tagesgeldkonto is an interest bearing account without a

fixed term. What this means is that you earn interest on the money you deposit

in this type of account (monthly, quarterly or annually)and the time duration is

not fixed. The interest rate varies as per market trends and is calculated on a

daily basis. A tagesgeldkonto is different from a Sparkonto (savings account9

and a girokonto (current account) mainly because the money is accessible at

any time without a fixed wait period. In Germany however, some of the most

famous banks like Sparkasse and Commerzbank offer 0.00% interest per

annum which is practically a joke.

 LESSON 2
DIFFERENT SAVINGS OPTIONS IN
GERMANY

Festgeldkonto
Festgeldkonto is another banking service in Germany that most ex-pats and

students aren't aware of. A festgeldkonto is just the opposite of a

tagesgeldkonto. The money deposited in a festgeldkonto has a fixed term

which means that it cannot be withdrawn from the bank before the term of the

deposit is over. It has a fixed term of interest for a fixed duration of time. In

principle, the interest rate earned on the money in a festgeldkonto is higher

than tagesgeldkonto and sparkonto simply because the bank can work better

with the money deposited for a longer duration of time. But if you take into

consideration how much the interest rate really is, you lose more to inflation

than you gain by interest. The interest rate offered by banks like Sparkasse on

festgeldkonto is around 0.30% per annum.

 LESSON 2
DIFFERENT SAVINGS OPTIONS IN
GERMANY

Depots
A depot is a depository account where financial instruments like ETFs, stocks

and funds are deposited. In Germany, the brokerage houses also provides the

depot account and such an account is called a Depotkonto in Germany.

Two options that exist for a depotkonto are:-

1. Depotkonto with Bank

2. Depotkonto with Discount Brokers.

While the advantage of having a depotkonto with a bank is that it is part of

other banking services provided with the bank and serves as a single access

point to maintain all the accounts without the need to make an advance

deposit, the disadvantage is high transaction costs.

A depotkonto with a broker comes with low transaction costs and the only ''so-

called'' disadvantage is that an advance deposit has to be made and

maintained to trade and make purchases.

 LESSON 2
PRACTICAL WAYS OF SAVING MONEY

Having a Separate Bak Account

Let's do a fun exercise.

Do you know the kids' song, ' If you are happy and you know it, clap your
hands'?
If yes, then we will do something similar right now, but I will change some

words of this song to make it relevant to this topic.

Ready?

If you've ever tried to save money, clap your hands...

If you've ever tried to save money, clap your hands...

If you've ever tried to save money and you've failed miserably if you've ever

tried to save money clap your hands...

Okay, now let's get serious for a bit.

The number one problem when it comes to most 'saving promises and

commitments' is that people tell themselves that after taking out all of the
expenditure, the amount that is left will be their savings. Now if you've ever

tried to save money, you must have realized that as long as you can see that is

money in your wallet or account, you will come up with fancy ways of spending

it.

Don't deny it, it's true! (we've all been there)

The thing that works best is not having the money at your disposal, to
begin with.
You must be thinking, what is this guy talking about?

Let me explain!

Follow this simple rule if you want to ' Actually' save money:-
Get a separate bank account and put aside your savings in that account.
 LESSON 2
PRACTICAL WAYS OF SAVING MONEY

Two important things to make this work flawlessly:-

1. Get a separate bank account with minimum to no monthly bank charges.

2. Automate the deduction process: What this means is that when you get

money through salary or blocked account, before doing anything else,

make sure that you put aside a specified sum of money in this separate

bank account. And the most important thing is to automate this. In most

banking banks you can automate this process so that in case even if you

forget doing this, the money gets automatically deducted and goes into

your other bank account.

I use N26 Bank for this. Every month money gets deducted from my main
account into my N26 account automatically.

Pros for N26 Bank

The concept of Spaces: Spaces are like

mini bank accounts in your main account that

you can use to put aside money for different

things. An example of this would be having

separate places for groceries, rent,

recreation, saving etc.

Instant Money Transfer: Most of the bank

accounts in Germany take at least 1-2 days

for transferring money from one account to

other. But not with N26. If you are

transferring money to another customer of

N26, it happens instantaneously and if you

are sending to somebody else, even then it

generally happens within the day.

 LESSON 2
PRACTICAL WAYS OF SAVING MONEY

Support in English: Anything that you need to do, read or ask

from the customer support, all of that can be done really easily in

English. This is something that most bank accounts struggle with.

Sending/Receiving Money to India: I would admit: this might

be the reason why I love it the MOST! N26 makes it so simple and

you can just directly transfer the money in INR and the transfer is

almost 6 times cheaper than the normal bank accounts! No

matter which currency you want to transfer the money, you can

do it very quickly and without hefty fees like other German bank

accounts.

No Forex costs: If you are on the paid plan of N26, you get real-
time currency exchange rates and no surcharge whatsoever when

you are paying with your debit card or taking money out from

ATMs worldwide.

Cons of N26 Bank

5 free ATM transactions with the paid plan and only 3 free ATM transactions

with the non-paid plan.

If you want to put cash inside your account, you can only do it free for 100

Euros a month and after that, there are some charges.

Conclusion
N26 is a great bank account to have at it is very convenient and it makes saving

money very practical.

Here is the Sign-Up link for the N26 account that you can use:

Step 1: Visit https://bharatingermany.com/n26

Step 2: Use the code ''bharatc0934''
 LESSON 2
PRACTICAL WAYS OF SAVING MONEY
Remember that saving means putting aside every penny that you would
have otherwise used in purchasing something. Another way to save money
is through credit cards. I'm pretty sure that now you must be thinking that this

guy has practically lost it. Credit cards are ways to spend money and not save

it. Well, that's not quite true. Let me explain how

Before we begin let me remind you that credit cards are the best if you
want to build up your SCHUFA Score.
A SCHUFA Score is your credit score and comes in handy when you want to

rent an apartment in all the major cities.

I am introducing you to two credit cards that I use regularly:

The American Express Payback Card: With the American Express

Payback card you save money while shopping for groceries in the form of

Cashbacks. The American express payback card is accepted in major

grocery stores and you accumulate points for every euro spent. You can

get the points transferred into your account in the form of actual money.

The good thing is that you dont pay anything for the card, there is even no

registration fee.

The Advanzia Gebührenfrei Mastercard Gold: The Advanzia credit card

literally has 'free' in its title which means that you do not pay any monthly

charges for having this card. Ba having some monthly transactions on your

credit card you can build your SCHUFA score slowly. Advanzia Gold

Mastercard is perfect for foreign transactions because it gives real-time

forex rates without any kind of foreign currency surcharge!

You can watch the video about credit cards for a

detailed explanation by clicking on the picture or

the link: https://youtu.be/mm8zhDP_2iI

 LESSON 2
PRACTICAL WAYS OF SAVING MONEY

You can get your free American Express Payback card through

this link and also get a 30 euro signup bonus:

http://www.amex.de/freunde/bHARACjz4s

You can get your free Advanzia Gebührenfrei Mastercard Gold

with a 25 euro signup bonus, by following the following steps:

Step 1: Click on this link

https://www.gebuhrenfrei.com/index.php/?
c2c=8W%2f8Z5a5GY1cXGmKkYTqybsPW35fAoyqavM8RTl8m
i0%3d
Step 2: Insert this code - 663NW3QDAASNDZUZ

Note: The Sign-up bonus changes from time to time. It can be anywhere between 25
to 40 euors. And to get the sign-up bonus you have to use the card once.
 LESSON 3
THE REAL GAME CHANGER: WHAT MAKES
ALL THE DIFFERENCE

Saving money is not different for most people. I agree it is not as easy as

breathing (effortless) but maybe like drinking 8 glasses of water every day,

seems difficult at first but slowly becomes a habit. The real task is actually

figuring out what to do with the saved money and where to put it.

Let's understand this with the help on an example

You are 22 right now, fresh out of university with a

bachelors degree and you decide that you would

rather start working in a company than go for a

masters. You make it a habit to save 200 euros

per year and put is aside in a retirement account.

Now comes the real question - what to do with

this money and where should you put it?

1st Option - Savings Account

As easy as putting money under the mattress. By putting aside 200 euros every

month 'under your mattress'' for 43 years (literally sleeping on money) you will

have 103200 euros at the age of 65. Not bad.

(200 x 12) x 43 Years = 103200 euros

 LESSON 3
THE REAL GAME CHANGER: WHAT MAKES
ALL THE DIFFERENCE

2nd Option - Shares

By investing in ETFs consistently and making monthly instalments of 200 euros,

and getting compound interest of 7%, you will have roughly 552026 euros as

interest on your investment of 103200 euros. when you are 65. Not bad at all is

it?

“COMPOUND INTEREST IS THE EIGHTH WONDER OF THE

WORLD”
-ALBERT EINSTEIN
 LESSON 3
THE REAL GAME CHANGER: WHAT MAKES
ALL THE DIFFERENCE

But the real game-changer is not the compound interest rate but the age at

which you start.

Consider the following example

1. Sam starts investing 200 euros per month in ETFs at the age of 22 and

does so till the age of 65. His earnings will be 552,026 euros

2. Tim starts investing the same amount of money till the same age but starts

at the age of 24 and earns 466,991 euros

THAT'S A DIFFERENCE OF 85,035 EUROS JUST

OVER A PERIOD OF TWO YEARS
When it comes to compound interest, starting early is important. A person who

started investing at the age of 20 will have better returns than someone who

started at the age of 22.

 LESSON 4
WHY YOU SHOULD CONSIDER INVESTING

Some people do it as a hobby, some people are interested in it but you should

ideally do it because you want to make smart decisions with your money.

Saving money is good. Period. But not doing anything with the saved money

and having it sit idle in your bank account is the worst thing you can do to your

money. Because of inflation, your money is losing its value by the day.

Having money saved in a bank account would have made sense if banks in

Germany would have paid interest on the money, even if the interest was just

slightly above the inflation rate. But the truth is that banks in Germany do not

have profitable interest rates. And because of the negative interest rate, you

end up losing something from the saved money.

Another important consideration is that the pension fund that you are paying

into will not be enough to support you during your old age. According to an

article published by Deutsche Welle, the number of old people is rising every

year.
 LESSON 5
THE GOLDEN RULES OF INVESTING

You might be wondering that if it is so simple then why isn't everyone doing it?

Well, to be honest, people are doing it and making smart decisions but there

are not that many people who think long term and follow the rules properly.

People tend to slip up!

#THE GOLDEN RULES OF INVESTING

Rule #1 - Think long term

Remember that you are in the long haul. If your aim is to double your money in

a short period of time then you might as well just go to Vegas and try your luck.

Rule #2 - Don't have emotional attachments with your

money
You have to learn to let go. You will go through ups and downs but ultimately

you will gain and your patience will be rewarded

Rule #3 - Invest in Good Companies

Dont invest in a company simply because everyone else is investing in the same

company. Learn to NOT FOLLOW the herd.

Rule #4 - Stay calm and rational

 LESSON 6
INVESTING FOR BEGINNERS

As a beginner, you probably want to make small yet meaningful investments

with the ultimate goal of minimizing risk. To start investing today, follow the

steps mentioned below:

1. Choose a broker - I initially started with Trade Republic and shifted to

Scalable Capital recently because they have more and better buying

options available. Also, Scalable Capital accepts more nationalities and

does not require having a german passport which means international

expats and students living in Germany can easily start their investment

now.

2. Open a Depot Account - The next step is to open a depot account. I got

mine opened with Scalable Capital in 2 days. You can choose your plan

and can upgrade to a better plan at a later stage

 LESSON 6
INVESTING FOR BEGINNERS

3. Choose an ETF - ETF, is a basket of different securities that are pooled

together into one fund which is traded on a stock exchange. Scalable Capital

offers two different ETF plans. The first one is the MSCI World Index which has

more than 1500 companies from all over the world and the Vanguard S&P 500

UCITS ETF which has the major 500 companies from the USA.

You can read about them through there links

MSCI World Index: https://www.msci.com/documents/10199/178e6643-

6ae6-47b9-82be-e1fc565ededb

Vanguard S&P 500 UCITS ETF: https://www.justetf.com/servlet/download?

isin=IE00B3XXRP09&documentType=MR&country=DE&lang=en

4. Starting a savings plan - The next step would be to open a savings plan. With

the free broker option in Scalable Capital, you get one free Savings Plan. This is

now my savings plan looks.

 LESSON 7
HOW TO START A SAVINGS PLAN

While starting out you probably want to start small.

Scalable Capital with 25 euros and on

I started with my YouTube channels
Brandewise and Bharatingermany I will show you how I build my portfolio with

25 euros.

Here I will show you how you can Savings Plan with Scalable
start your

Capital. If you select the Free Broker you get 1 Savings Plan for free.
Follow these steps:

Step 1: Go to this link: https://brandevise.com/scalablecapital

(You get a 25 euro signup bonus with this link till 31st October 2020)

Step 2: Fill in your email ID. Look at the picture for reference. You will get an

email confirmation on the email address that you provide. After confirming the

email address follow the steps by filling in all the necessary details.

Step 3: Do your POSTIDENT Verification.

(You can watch the video on my YouTube Channel in which I show how I opened

my depot with Scalable Capital and did the POSTIDENT Verification. Just click on

this YouTube Icon)

 LESSON 7
HOW TO START A SAVINGS PLAN

Step 4: Transfer Money in your Scalable Capital Broker Account (The minimum
that you have to transfer is 25 euros)

Step 5: ETF in Scalable Capital. As an example, you

Search and select for the

can choose Investors High Yield Low Volatility ETF. S&P500 Index or MSCI

World Index are both beginner-friendly ETFs to start with. Also, check the
yearly Total Expense Ratio

Step 5: Go to Sparplan einrichten

Step 6: Put the amount aside

Step 7: Confirm and it will start investing monthly as long as you have sufficient

credit in the account.

Note that the money gets automatically deducted from your account which is a

good thing because you dont have to manually remember to put it aside every

month.
 END NOTE
When you are 65, do you want to retire with 103200

euros or 655226 euros?

Only a fool would choose the first option.

The thing is that the retirement fund was probably

sufficient 20 years ago, but now with the rising

inflation rate and rising medical bills, you need to

have a cushion on top.

Investing consistently with patience and earning a

compound interest gives you that option.

If you look at the MSCI World Index, you will notice that the returns have been

consistent and growing

To Start Investing and making better investment decisions, open your

account with Scalable Capital through this link:
https://brandevise.com/scalablecapital