Where should an immigrant in Germany invest? A decision framework
EUR ETF vs German property vs home-country assets — the honest trade-offs on tax, effort, liquidity and currency, plus a clear decision framework built around the one question that decides everything: where will you actually retire?
Three doors: ETF, German bricks, or home
Every euro you save in Germany faces the same choice — a low-effort EUR index fund, a German rental property, or sending it home. There's no universal winner, but there is a right answer for you. It turns on where you'll spend the money, not where you're from.
decides most of your allocation
1 question
Euros forever, or home eventually? Almost every trade-off below — currency, liquidity, tax, effort — resolves once you answer that honestly. Match your assets to the currency of your future spending.
The three doors, side by side
| Provider | Typical return | Tax | Effort / liquidity |
|---|---|---|---|
EUR equity ETF Best | ~7%/yr long-run nominal | 26.375% Abgeltungsteuer + Vorabpauschale; 30% Teilfreistellung on equity funds | Very low effort, fully liquid |
German rental property | ~2.5% (Munich) to ~5% (Leipzig) gross yield | Progressive rate on rent, but AfA + §23 tax-free after 10yr | High effort, illiquid, 9-12% to buy |
Home-country assets | High nominal, often negative in EUR terms | Home rules + German reporting | Currency + repatriation risk |
- Typical return
- ~7%/yr long-run nominal
- Tax
- 26.375% Abgeltungsteuer + Vorabpauschale; 30% Teilfreistellung on equity funds
- Effort / liquidity
- Very low effort, fully liquid
- Typical return
- ~2.5% (Munich) to ~5% (Leipzig) gross yield
- Tax
- Progressive rate on rent, but AfA + §23 tax-free after 10yr
- Effort / liquidity
- High effort, illiquid, 9-12% to buy
- Typical return
- High nominal, often negative in EUR terms
- Tax
- Home rules + German reporting
- Effort / liquidity
- Currency + repatriation risk
Door 1 — The EUR ETF (the low-effort default)
For most immigrants who earn and spend in euros, this is the sensible core. It compounds in the currency you live in, and you can sell any morning.
Door 2 — German property (real, but slow to pay off)
German bricks are not a quick win. You pay 9-12% Kaufnebenkosten on day one, gross yields run from ~2.5% in Munich to ~5% in Leipzig, and the honest rent-vs-buy break-even is 25-40 years. But it has genuine strengths for the long-hauler:
Why property can still win
- §23 EStG: a private gain is tax-free after a 10-year hold
- AfA depreciation shelters rental income (2/2.5/3% linear, or 5% degressive on new-builds)
- Forced saving + inflation-linked rents if you hold for decades
- A EUR-denominated hard asset if you're staying in Germany for good
Why it usually shouldn't be door one
- 9-12% sunk cost to buy, and friction to sell
- Illiquid — you can't sell one bedroom in an emergency
- Thin yields in exactly the cities people want to live in
- Rent taxed at your full progressive rate
Only walk through this door if you'll hold 15+ years. Test it in rent vs buy, rental yield and AfA, and read the property tax guide.
Door 3 — Home-country assets (the currency trap)
The one exception: if you will genuinely retire at home, a home allocation is a rational currency hedge — your future costs will be in that currency. The trap only closes on people who earn, spend and retire in euros but invest at home out of habit.
The decision framework
Q1 — Where will you actually retire?
Start hereEuros forever → weight EUR (ETF, maybe property). Home eventually → a deliberate home allocation is a hedge, not a mistake.
Q2 — What's your horizon and liquidity need?
Under 10-15 years, or you might need the cash → ETF's liquidity wins. 15+ years and stable → property becomes viable.
Q3 — How much effort do you want?
None → ETF. Willing to be a landlord for decades → property.
Q4 — Have you priced the currency + repatriation drag?
If a home return can't survive a ~9.5%/yr slide and a repatriation cap, it isn't really beating a EUR ETF.
A sane default for most euro-earners
If you earn and expect to spend in euros: make a broad EUR ETF your liquid core, consider German property only if you'll hold 15+ years, and keep home-country assets as a hedge sized to how likely you are to retire there — not as your main engine. Boring, liquid and denominated in your spending currency beats exciting, illiquid and denominated in a falling one.
Where the numbers come from
Fund taxation (Abgeltungsteuer, Vorabpauschale, 2025 Basiszins 2.53%, Teilfreistellung) follows the Investmentsteuergesetz.Investmentsteuergesetz Property yields and the §23/AfA rules are covered in the property guides; currency-erosion figures use long-run PKR/INR/BDT vs EUR averages.Deutsche Bundesbank This is educational, not investment advice — for a personal plan, a licensed Honorar-Finanzanlagenberater or Steuerberater. Figures verified 2026-07-18.
Last updated: 2026-07-18