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I'm an expat from Russia living in Germany and I'd like to invest 10-20k€ for 1-3 years somewhere. Bank deposits have an extremely low interest rate. The most popular investment is property but I'm not sure if I'll stay here for decades.

Are there any options to get at least 5% annually after taxation with medium-low risks? I am not familiar with a stock market at all.

  • The hyper short answer is no, there isn't anything near that return number with medium to low risk. Keep it in cash until your risk tolerance or time horizon changes and you can make the correct decision would generally be the standard advice here. – Philip Oct 19 '17 at 14:50
  • With that time frame and that risk appetite, banks would only have to offer 1% to be buried under a wall of money. (I'd certainly put 10k in, and probably 100k if they'd take it). – Martin Bonner Oct 19 '17 at 16:21
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Due to the zero percent interest rate on the Euro right now you won't find any investment giving you 5% which isn't equivalent to gambling.

One of the few investment forms which still promises gains without unreasonable risks right now seems to be real estate, because real estate prices in German urban areas (not so in rural areas!) are growing a lot recently. One reason for that is in fact the low interest rate, because it makes it very cheap right now to take a loan and buy a home. This increased demand is driving up the prices.

Note that you don't need to buy a property yourself to invest in real estate (20k in one of the larger cities of Germany will get you... maybe a cardboard box below a bridge?). You can invest your money in a real estate fund ("Immobilienfond"). You then don't own a specific property, you own a tiny fraction of a whole bunch of different properties. This spreads out the risk and allows you to invest exactly as much money as you want. However, most real estate funds do not allow you to sell in the first two years and require that you announce your sale one year in advance, so it's not a very liquid asset.

Also, it is still a risky investment. Raising real estate prices might hint to a bubble which might burst eventually. Financial analysts have different opinions about this. But fact is, when the European Central Bank starts to take interest again, then the demand for real estate property will drop and so will the prices.

When you are not sure what to do, ask your bank for investment advise. German banks are usually trustworthy in this regard.

  • "and require that you announce your sale one year in advance" well that's interesting. Very much like private closed-end funds in the US. – RonJohn Oct 20 '17 at 10:33
  • @RonJohn Indeed. This 12 month period is in fact a government-imposed regulation on closed real estate funds. It was introduced as a reaction to the financial crisis 10 years ago which got triggered by too many people dumping their real estate funds all at once. – Philipp Oct 20 '17 at 11:31

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