Brokers & Depots
A Depot? I just wanted to buy an ETF.
Fair enough. Here's what a Depot is, what brokers really charge and why it matters who handles your German tax.
Brokers in one paragraph
To buy ETFs you need a securities account, called a Depot, at a bank or broker. Brokers differ in fees, in what you can buy and in whether they take German tax off for you.
- Your bank accountYour everyday Girokonto.
- Cash accountVerrechnungskonto: money waiting to be invested.
- OrderYou buy, or a savings plan buys for you.
- Trading venueAn exchange or a trading partner executes the order.
- Your DepotThe units are recorded in your name.
Securities in custody
Your ETF units are your property. If the bank or broker fails, they are normally handed back or transferred.
Cash in the account
Eligible bank deposits are protected up to €100,000 per person and bank. That is a different protection.
Market risk
No scheme protects you when prices fall. A drop in value is investment risk.
Broker German, decoded
- Depot
- Your securities account. Your ETFs and shares are held here.
- Verrechnungskonto
- The cash account linked to your Depot.
- Freistellungsauftrag
- Your instruction to a German bank to apply your tax-free allowance.
- Anlage KAP / KAP-INV
- Tax return forms for investment income, needed if your broker doesn't withhold German tax.