From Bayer to BMW, Germany is home to some of the biggest companies in the world. If you’re thinking of expanding your investment portfolio to the birthplace of Beethoven and Einstein, read on to find out how to go about it and what to bear in mind.
You can indeed. A number of UK brokers and investment platforms offer access to share dealing on the Frankfurt Stock Exchange, the largest of Germany’s stock exchanges. From there, you’ll be able to buy stocks in German firms such as financial firm Deutsche Bank or major car manufacturer Volkswagen. In our guide to share dealing platforms, we give details of which providers let you invest with which foreign exchanges.
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Not every UK investment platform lets you trade German stocks on the Frankfurt Stock Exchange, but there are enough to give you a choice. Options include:
When you’re buying and selling German stocks, there are a few investment fees you may encounter. Not every investment platform charges every type of fee. The main ones include:
There are a few ways to go about this. You can use the details of assets listed on the Frankfurt Stock Exchange to check how various stocks have been doing, though this may be a bit of a fiddle and it’s likely best if you already have specific stocks in mind. Alternatively, investment research and analysis websites often publish round-ups and recommendations of the best stocks to invest in within different regions and sectors, so a Google search should help.
You can also use any online tools on offer from your investment platform or tips from your broker.
When you review publications of the “best performing stocks”, make sure you take a look at how they’ve determined “best” when making a decision. It may or may not align with your goals. For example, for you the “best performing” stock might be one that delivers consistently solid returns and decent dividends, rather than one where performance has been stellar over the short-term but is more volatile over the long term.
As you can’t directly invest in Germany, we have used the German DAX index fund which comprises of 30 major German blue chip companies listed on the Frankfurt stock exchange. This allows you to get a good idea on how well the stock exchange is performing over time.
There are a couple of alternatives to buying German stocks outright, which give you exposure to the German market in very different ways.
When you’re thinking about buying German stocks, most of the considerations are exactly the same as if you were buying UK stocks, with a couple of nuances thrown in. Some of the things to think about are:
Let’s start with a slightly broader question: is it worth investing in overseas markets generally? The answer to that is a resounding yes. You’ll often hear investment experts waxing lyrical about the importance of a diverse portfolio and – alongside buying diverse types of asset (stocks vs bonds vs property, for example) and in diverse sectors – investing internationally is a good way to achieve this.
In terms of Germany specifically, well it’s the largest economy in Europe (just ahead of the UK). It’s also the base of some major global businesses, notably car manufacturing giants such as BMW, Daimler and Volkswagen. So if you’re keen on investing in the automotive sector, Germany is one of the obvious places to look.
Long story short, the choice of where to put your money is yours. But German stocks are worth throwing into the mix for consideration. Or, if you need a little help deciding, consider speaking to a professional financial adviser who will be able to recommend the right options for your circumstances.
Investing in German stocks could help diversify your investment portfolio and give you exposure to some major global companies. Not every investment platform lets you deal shares on the Frankfurt Stock Exchange, but enough do that you’ll have a decent choice. Compare the fees, information and features of each platform before making a decision. If you’re a novice investor, investing in ETFs that track the performance of a number of German stocks may be a simpler and lower-risk option than buying individual shares.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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