How to save for retirement with ETFs

What are ETFs? How do I invest in them? Should I use them to supplement my retirement income? What is ETF pension insurance? Let us explain

4 minute read2022-10-27
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There is a lot of jargon surrounding finances, and we get it – it can be hard to keep it all straight. If you have ever confused ETF with NFT, you are forgiven! Allow us to clear up what ETFs are, why it is a good idea to invest in them to save for retirement, and what options you have for investing in them.

What is an ETF?

ETF stands for exchange-traded fund. That means it is a fund that can be traded on an exchange like a stock. An ETF is like a basket of investments such as stocks, commodities, or bonds. When you invest in an ETF, you invest in everything in it, and the contents may fluctuate over time.

Why is it important to make private provisions for retirement?

Relying on a state pension is unpredictable – our demographics are changing, pension levels are declining and inflation is on the rise. To maintain a comfortable lifestyle in retirement, you would ideally have 80% of your last net salary at your disposal, but current pension levels in Germany provide less than 50%.

Inflation is also making life more expensive and our savings worth less, and unfortunately, the energy crisis in Europe has driven inflation to the highest it has been in 25 years.

A statutory pension often won’t suffice to provide long-term financial security, so it is important to make private provisions as early as possible. A private pension plan will help you grow your money and close the gap.

Pros and cons of investing with ETFs


  • Transparency: ETFs are based on existing indices and passively replicate them, so you always know what it is composed of, unlike active investment funds.
  • Tradable at all times: ETFs are highly liquid. Investors can buy and sell ETFs on the stock market at any time, so you can easily turn your securities into money whenever you want.
  • Efficient cost structure: You buy ETFs directly on the stock exchange, avoiding startup fees (which can be up to 5% of your investment for an active fund) and paying lower maintenance fees. A yearly fee for an ETF is usually less than 0.5%, compared to upwards of 2% for an active fund.
  • Diversification: To reduce risk when investing, you need diversification. Investing in an ETF means investing in many (often over 1,000) securities at once!
  • Protection against insolvency: ETFs represent special assets of fund companies and must be held separately from a company’s own assets, keeping investors’ money safe even if a company becomes insolvent.


  • Herd mentality: As ETFs become more popular, some of their volumes are large enough to amplify price fluctuations on the stock exchange. If the price of the fund’s securities decreases and investors sell their shares in the ETF at this time, they might incur losses.
  • Exchange rate risk: If you invest in an international ETF, there may be multiple currencies involved and exchange rates must be taken into account when buying and selling shares, which may affect returns.
  • Not suitable for short-term investments: Even though you can trade ETFs at any time, they are suited to a long-term investment period of several or many years.

ETFs and inflation

You can protect your investments from inflation by being broadly diversified and sticking with a long holding period that can withstand market fluctuations. ETFs are a great way to do this because each fund contains many securities, and are best held over long periods of time.

Certain types of ETF can protect your investments from inflation, such as funds based on more robust industries like consumer staples or utilities, gold, luxury goods companies, and raw materials.

How do I invest in ETFs?

Basically, there are two options how you can invest in ETFs:

  1. Open a securities account. Many online banks offer securities accounts and are significantly cheaper than traditional banks.
  2. Take an ETF savings plan with tax benefits with an insurance company. Digital intermediaries offer you numerous advantages here.

Although many people think ETFs only make sense in a securities account, it's worth taking a look at the second option. We recommend a combination of both solutions, but more about that now.

Why invest with an insurance policy?

An ETF pension insurance is a proactive way to reliably invest long-term  in your own retirement provision that comes along with numerous advantages:

  • You get a lifelong pension that will never run out before the end of your life.
  • You benefit from a very high tax advantage in retirement and you can change your shares and their allocation without charge.
  • Your investment is managed for you.
  • Insurance products are more strictly regulated and reliable due to contractual agreements.
  • It provides flexible saving options, including the right to pause deposits.

What do I get with Getsafe?

All of the above, plus…

  • A consultation with our experts to chat about exactly what coverage makes sense for you.
  • You decide which funds you want to invest in, and we take care of all the research and administration.
  • You decide when you want your pension to start and whether you want monthly payments or a one-time lump sum payment.
  • Payments never stop – you are guaranteed monthly payments as long as you live.

Talk to us to get more information and advice about investing in ETFs when it suits you.

Author: Getsafe