Why Freetrade can't win me over, yet. A german perspective

Freetrade loving German here.

I remember the last time I looked into stocks and Germany my conclusion was the following:

“If I perform well with stocks” = I have to pay a lot lot lot of taxes
“If I am performing ok with stocks” = I have to pay a lot lot of taxes
“If I underperform” = I have to pay a lot of taxes
“If I lose all my money a la BITCONNECT” = I don’t have to pay any taxes

It became clear early on that even if I am a smart investor for the long run – on top of the risks I do have to pay all these taxes.

Compare this with my current setup here in the UK:

ETFs via Vangaurd ISA
Freetrade Stocks (non-ISA at the moment but under capital gains limit)

Unless Germany is changing their tax system on stocks and dividends… I find the UK and Freetrade a very attractive environment to invest.


Ageed apart from the selection.
Have you read the book by Gerd Kommer? :slight_smile:

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NO TELL ME MORE ! I do indeed need something new to read :slight_smile:

Gerd Kommer - Souverän investieren mit Indexfonds und ETF :slight_smile:

I thought its what every german has to read haha.

Its similar to “The Intelligent Investor”.

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You might want to sync your personal situation with the taxation regulation - especially with regards to your residency status.

Ordinary UK residents (as opposed to non-doms or those with unlimited tax liability in Germany), can’t claim the German €801 relief anymore.
Dividend income is taxed at source, so your German broker will withhold 25% plus 5.5%, about half of which you can reclaim from the German HMRC equivalent as per double taxation agreement, but that’s a very manual process.

Re comdirect: I’m a bit confused by their Wertpapiersparplan conditions - account appears to be free initially, but there’s still an order charge of 1.5%. That, plus all the tax is more off-putting to me than a limited stock/ETF universe.

Re Trade Republic: They seem to have pretty strict residency requirements for new customers.

I for one can’t wait for Freetrade to expand their universe. As soon as FT covers the stocks I still hold in Germany, I’ll be transferring (well, let’s see how EUR will be handled), even if that means taking a one-off Capital Gains Tax hit by selling and repurchasing. The ideal situation of course would be a cross-country portfolio transfer-in, but that seems rather unlikely…


Jus got it from Amazon ! DANKE !

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Is there an English or Spanish edition?

Is dividend income taxed with 25% and not 15%? Or is the other 10% other taxes like “Kirchensteuer” etc.?

That order charge with comdirect is 0% IF you pick one of their “free” 170 ETFs. This is not true for any other stocks or ETFs you might want to select. Those have indeed a 1.5% order charge.

Abgeltungssteuer is 25% and charged on interest & dividends, and on that 5.5% Solidaritätszuschlag (fab material for compound word fetishists), which I think is a total deduction of 26.375%. Normally brokers automatically withhold this, including for overseas residents.

The double taxation agreement specifies max 15% withholding tax on dividends, so as UK tax resident you can reclaim 11.375% from Bundesfinanzministerium.

Note, this is just my understanding as a normal investor, I can’t guarantee that the above is correct, but it reconciles with my paperwork…

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@Raul Unfortunately, I do not think there is.
However there are other books like “The Little Book of Common Sense Investing by Bogle” that are all about passive investing.
The book by Gerd Kommer is just mainly focused on broadly diversified ETFs and proclaims the advantage of passive investment strategies over active ones based on scientific evidence.

Now this topic is always highly controversial between people so people have to come to their own conclusions. Other good books are Talebs “Skin in the Game” or “Fooled by Randomness”.

You got any book recommendations?

@CEY You are welcome. The Gerd Kommer book is one of the best passive investment books I ve read so far.
I think it should be read by anyone interested in passive investing or long-term investing in general.

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@Tim Okay, I believe I have read that somewhere before :slight_smile:
It kinda dawned on me. I also did not understand what actually changed with the new taxation laws of 2018. There are a lot of articles about it out there which seem very convoluted.

Thanks again.

Hi @reiro, this thread has an interesting list of books

I’ve read some of them and can’t recommend enough:

Common Stocks and Uncommon Profits, by Philip Fisher

The Intelligent Investor, by Benjamin Graham

Beating the Street, by Peter Lynch

One Up On Wall Street, by Peter Lynch

A Random Walk Down Wall Street, by Burton G. Malkiel

Some other books I’ve read and recommend:

The Little Book of Common Sense Investing, by John C. Bogle

Deep Value Investing, by Jeroen Bos

Applied Value Investing, by Joseph Calandro

The Little Book of Big Dividends, by Charles Carlson

Triumph of the Optimists, by Dimson, Marsh & Stauton

Quality Investing, by Eide, Cunningham & Hargreaves

The Little Book That Still Beats the Market , by Joel Greenblatt

You Can Be a Stock Market Genius, by Joel Greenblatt

The Warren Buffett Way, by Robert G. Hagstrom

The Most Important Thing, by Howard Marks

Warren Buffett’s Ground Rules, by Jeremy Miller

The Dhandho Investor, by Mohnish Pabrai

Framework for Understanding Poverty, by Ruby Payne

The Millionaire Next Door, by Stanley & Danko

The Only Investment Guide You’ll Ever Need, by Andrew Tobias

The Little Book of Safe Money, by Jason Zweig

Books I’m reading and recommend:

Investments, by Bodie, Kane & Marcus

Berkshire Hathaway Letters to Shareholders, by Warren Buffett

A Non-Random Walk Down Wall Street, by Andrew W. Lo

A short story I’ve read when I was 15:

The Anarchist Banker , by Fernando Pessoa


You’ve read a lot, maybe you can do a post on your investing strategy as a result of reading these books


It would be a very short post due to my personal circumstances, ie, small bankroll.

But I’ll tell you this much. It has been both an eye opening experience and a humbling experience

Edit: I mainly go for index trackers. Outside Freetrade, I have money on a SP500 tracker.

On Freetrade I have 3 ETFs, all focused on dividends: S&P Dividend Aristocrats, UK Dividend and Euro Stoxx 30 Dividend. If I understand correctly, dividend stocks have less volatility. Why ETFs rather than picking individual stocks? Cuz it’s the most sensible thing to do with the small amount of money I am able to deploy, and I find it hard to believe reading those books is enough. I mean, will I play football as good as Messi if I buy and put on his boots and jersey?! But I’ll give it a go with fractionals and a small pot.

I also allocate some funds to crowdfunding. At the moment the weight of my crowdfunding investments is on the high side and I must not do any more for a while in order to regain balance.

I do like to read. I wouldn’t do anything else in life if I could


Thanks for sharing!

I have my ISA all in Lifestrategy 100 and I think FTSE All Cap.

Then I have about 15 different individual stocks through the Freetrade app. I’ve been reading and watching videos of Peter Lynch and trying to follow his philosophy of invest in what you know (and also research fundamentals).

I’m more open to risk so that’s why I’ve got some individual stocks. I work and have friends in engineering, so I discover some info that may not be as well known/understood by institutional investors. I’m hoping Freetrade will add more interesting LSE and AIM stocks as there’s mainly only well know stocks at the moment, so this limits what you can invest in.

Interesting. I read way less than you. Always good to hear other investment strategies.
Where do you crowdfund?

While the choice on FT can seem somewhat limited, it’s plenty and any more choice would possibly just be a diversion. Do we need more indices that investable securities anyway? Anyway …

Having grown up in Germany and keeping in touch with some Germans, taxes are bad. 25% tax on all capital gains and all dividends with a very low exemption. Yes, many banks and brokers offer free savings plans on some products. However, I recently checked this, the average TER for an open ended fund in Germany is generally much higher than its UK counterpart. For passive products this is unlikely the case.

Here comes an interesting fact which might be of interest to some of you. If you open a stock broking account in Germany and you don’t have a tax residence in Germany you are don’t pay the 25% tax, everything is tax free with the understanding that you honestly tax this in your country of residence, which I do. For UK residents this is nice as we have a generous capital gains tax threshold. I am in the process of opening an account and I expect the process to complete within a total of 4 weeks!!! Yes, letters, photocopies and an id check via something like zoom. And more paperwork to prove you pay your taxes abroad and have no tax residency in Germany. So, if your German is semi-fluent and you can stomach the admin, you can have an account is a different jurisdiction, denominated in a different currency, with low dealing costs and access to a large array of products.

However, you have to find a broker first that lets you join without a German address; especially now that the UK is not an EU country anymore. It’s not easy, a lot of hassle. Not sure why anyone here would do that given that you’re not taxed here anyways.

Holding foreign currency is easier with different providers and fund performance isn’t related to the account currency when you plan on bringing it back to the UK eventually.