Living in Germany: Set up these accounts

There are three key types of accounts to set up if you want to start your investment journey:

• Girokonto: This is the most basic type of account, and almost everyone has one. Some banks also offer it together with a Visa debit card.

• Savings account (Tagesgeld / Sparkonto): Different banks may use different names for this type of account. For example, ING calls it an Extra-Konto. It is usually free to open and maintain.

• Investment account: This is normally referred to as a Depot or Depot-Konto. It is also usually free to open and maintain.

My rule of thumb is simple: If it costs you nothing to open and maintain, and it helps you manage your money better, do it. Open it. Today.

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Which bank should you go with?

Again, it depends on your existing ecosystem, meaning the bank you are already using. That is a good place to start. Ask yourself these questions:

#1. Is my bank charging me a monthly or yearly fee just for keeping my money there?
If the answer is YES, move to question two.

#2. How hard would it be for me to research and choose a better bank?
If the answer is “not very hard,” then go ahead and do it.

Sometimes, it can be as simple as asking a few good friends which bank they use and whether they are happy with the service. Try to ask friends who are good with money, since they are more likely to give you useful answers. Most of the time, switching is not that hard. The most inconvenient part might simply be going to the post office for PostIdent. But I have opened several accounts and looking back, weeeellll…. PostIdent was never a problem!

Then clear up the rest: If you find a better bank, move everything there and close your current account.

Then start investing…
(I will share my principles in the next blog.)

The key point here is: Think. Review. Take Actions.
Don’t keep reading if you have not done the homework yet. 😉

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My personal story:
When I arrived in Germany as an international student, Sparkasse was one of the easiest banks to open an account with. People say their ATMs are everywhere and that they are one of the most established banks in Germany. That part is true. The less fun part? They charge me about €6 a month (it increases almost every year). That is €72 a year, which is basically the price of a warm Uniqlo jacket.

I still have not cancelled the account because of a rumour that having an account with a long-established bank like Sparkasse could help your SCHUFA score. I am not sure about this but I decided to believe it because my goals for the next 2 years is to improve my SCHUFA score.

Sometimes you may choose to lose a bit of money on purpose. I am doing that right now with Sparkasse. The important question is: Can I clearly justify this decision in both the short term and the long term?

If the answer is unclear, go back to my rule of thumb and switch the bank.

Life is expensive. A good life is even more expensive. Be smart with your money.

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If you decide to open any of these accounts and would like to support my work, you can use my referral links below:

• ING Girokonto
• ING Extra-Konto
• ING Depot-Konto
• Trade Republic Investment Account