Property or stocks? Anyone thinking about building wealth knows this question. With the reform of state-subsidised retirement provision, there’s a new answer: the Altersvorsorgedepot (retirement investment account). The law passed by the German Bundestag opens up, for the first time, the possibility of saving for retirement in ETFs and stocks with state support — without an insurance wrapper, without upfront fees, without a guarantee requirement. For property owners, investors and anyone thinking strategically about their wealth, this means: a new asset class with substantial tax advantages now stands alongside bricks and mortar. And the interesting question is no longer “property or investment account”, but: how do you combine both so that leverage, cash flow and tax advantage interlock to maximum effect?
The Altersvorsorgedepot is the centrepiece of the biggest reform of state-subsidised retirement provision since the introduction of the Riester pension. Unlike previous Riester products, it allows contributions to be invested directly in funds, ETFs and stocks — without a mandatory contribution guarantee. The savings phase is completely tax-free: no withholding tax on dividends, no tax on realised capital gains within the account.
The key facts at a glance
Feature
Altersvorsorgedepot (new)
Riester pension (old)
Investment type
ETFs, funds, stocks, bonds
Insurance, bank savings plan
Guarantee
3 variants: Pure (0%), 80%, 100%
100% contribution guarantee mandatory
Basic allowance per person
up to 270 € (boost up to 540 €)
175 €
Child allowance
300 € per child/year
300 € per child/year
Maximum subsidised amount
3,500 € rising to 5,250 €
2,100 €
Taxation during savings phase
tax-free
tax-free
Taxation on payout
deferred (income tax)
deferred
Self-employed eligible
Yes (NEW!)
No
Earliest payout start
from age 65
from age 62
Eligible people
approx. 50 million
approx. 35 million
Particularly relevant: anyone choosing the Pure (no guarantee) variant can invest their contributions entirely in higher-return assets. Historically, the average return of a broadly diversified equity ETF (e.g. MSCI World) is around 7 to 8 percent per year — well above the inflation rate and above most guaranteed products.
Three guarantee variants: which one suits you?
The reform deliberately offers flexibility. Depending on your risk appetite, you can choose between three levels:
Pure (0% guarantee): Maximum return potential. The entire capital is invested in the market. Sensible for young investors with 20+ years remaining.
80% guarantee: At least 80 percent of contributions paid in are guaranteed at the start of retirement. A compromise between security and return.
100% guarantee: Full contribution preservation, as with the old Riester pension. Lowest return potential — sensible only for a short remaining term of under 10 years.
Return difference over 30 years
A concrete example with a monthly contribution of 200 € over a 30-year term:
Pure: approx. 244,000 € final capital (7% return fully effective)
Property as retirement provision: strengths and weaknesses
Property has been considered one of the most popular forms of investment in Germany for decades. The reasons are obvious: inflation protection through rising rents, tax advantages through depreciation, leverage through debt financing and — if owner-occupied — rent-free living in old age. According to the German Savings Banks and Giro Association, around 42 percent of all households own their home.
The underestimated leverage effect
The real magic of property lies in the return on equity achieved through debt financing. A concrete example:
Purchase price of a flat: 400,000 €
Equity: 80,000 € (20%)
Value growth of 2% p.a. over 10 years: +88,000 €
Return on equity: approx. 11% p.a. — from value growth alone, without any rental surplus
No securities account offers this kind of leverage. Anyone investing 80,000 € in the stock market has 80,000 € of working capital. Anyone using 80,000 € as equity has 400,000 € of working capital.
The structural weaknesses
But property also has drawbacks that investors often underestimate:
Concentration risk: anyone buying a property for 400,000 € has their entire wealth tied up in a single asset in a single location.
Illiquidity: a property cannot be sold in parts. Anyone who needs 50,000 € has to sell the whole property or take out an expensive additional loan.
Maintenance: roof, heating, façade — the rule of thumb of 1% of market value per year for reserves noticeably eats into returns.
Regulatory risk: rent caps, mandatory energy renovations, possible wealth tax debates — legislators are intervening more and more.
Location risk: a property in a shrinking region can even lose value in the long run.
This doesn’t mean property is bad. It means that on its own it doesn’t represent a complete retirement strategy. This is exactly where the Altersvorsorgedepot comes in as a complement. Anyone considering using an inherited property for retirement provision will find the key options in the guide to an inherited family home.
Why combining property and an investment account makes sense
The strongest retirement strategy is not an either-or decision. It’s a case of both. Property delivers stability, cash flow and inflation protection. The investment account delivers diversification, liquidity and disproportionate growth opportunities.
Direct comparison of both asset classes
Criterion
Property
Altersvorsorgedepot
Diversification
Low (1 asset, 1 location)
High (1,600+ companies via ETF)
Liquidity
Low (months until sale)
High (tradeable daily, but tied up until retirement)
Entry capital
50,000–100,000+ € equity
From 10 €/month
Leverage
High (4–5x via debt financing)
None
Ongoing costs
High (maintenance, administration)
Very low (0.1–0.5% TER)
Tax support
Depreciation, deductible expenses
Allowances + tax-free savings phase
Inflation protection
Yes (rent increases, value growth)
Yes (corporate profits rise too)
Administrative effort
High (tenants, tradespeople, property management)
Minimal (set up, let it run)
Inheritance
Possible (subject to inheritance tax)
Only to a spouse without losing subsidy status
Seizure protection
Limited
Protected from creditors during savings phase
Three practical scenarios from everyday investor life
Scenario 1: The Müller family, 35, employed
The Müller family owns a flat in Hamburg (purchase price 350,000 €, loan instalment 1,200 €/month) and additionally opens an Altersvorsorgedepot with the Pure variant:
Monthly contribution: 200 €
Basic allowance: 540 € (2 eligible people)
Child allowance: 600 € (2 children)
Total subsidy: 1,140 € per year
Assumed return: 7% p.a. (MSCI World average)
Term: 30 years
Result after 30 years: the account grows to around 310,000–350,000 € — with own contributions of only 72,000 €. State subsidies alone: over 34,000 €. A liquid reserve alongside the then fully paid-off property.
Eligible for the subsidy for the first time. Owns two rented flats but no securities account.
Monthly contribution: 350 € (from rental surplus)
Basic allowance: 270 € (single)
Special expense deduction: approx. 1,700 € tax saving at a 42% marginal tax rate
Term: 23 years
Result: the account grows to approx. 245,000 € — Tobias broadly diversifies his previously pure property concentration risk across the global stock market for the first time.
Scenario 3: Sabine, 52, late starter
Has 13 years left until retirement. Chooses the 80% guarantee because of the shorter remaining term.
Monthly contribution: 500 €
Basic allowance: 270 €
Term: 13 years, return 5% p.a. (mixed portfolio)
Result: the account grows to approx. 113,000 € — a supplement to the home she will live in rent-free in old age.
Anyone who wants to run their own scenarios can find various calculators on AktienRenteRechner.de — from the Altersvorsorgedepot to classic pension calculators and comparisons of guarantee variants.
Altersvorsorgedepot vs. a free ETF account: what’s really worth it?
The most important question for strategic investors: is tying up capital until retirement even worth it — or is a free ETF account with capital gains tax more attractive?
https://lukinski.com/wp-content/uploads/2024/11/ehepaar-erbe-mann-testament-vater-geschwister-traurig-tod-allein-hilfe.jpg8001200L_kinskihttps://lukinski.com/wp-content/uploads/2024/04/lukinski-logo-real-estate-investment-germany-house-villa-off-market.svgL_kinski2026-03-21 07:17:382026-03-21 07:17:38Retirement Investment Account vs. Property: How to Combine Both and Build Optimally for Retirement
The Altersvorsorgedepot is the centrepiece of the biggest reform of state-subsidised retirement provision since the introduction of the Riester pension. Unlike previous Riester products, it allows contributions to be invested directly in funds, ETFs and stocks — without a mandatory contribution guarantee. The savings phase is completely tax-free: no withholding tax on dividends, no tax on realised capital gains within the account.
