Buy and sell German government bonds

German government bonds are considered a relatively safe investment. Together with Swiss bonds, they are seen as the safest investment. One of the reasons for this popularity is probably that many other government bonds, for example those of Greece, are seen as unsafe. The higher the demand, the lower the interest that Germany has to pay. There is a high demand for German government bonds. German government bonds are considered the safest government bonds in Europe. The German government issues the bonds to finance its national debt. Investors can buy the bonds for a certain period of time. They thereby lend money to the German government. Germany then pays a certain interest on those bonds. The amount of that interest depends on the demand for the shares. If there is a lot of demand, a lower interest rate can be offered. When demand is low, a higher interest rate must be offered to make it attractive for investors to invest money. The level of demand partly depends on how safe government bonds are seen as an investment.

Why are German government bonds so popular?

If Germany is expected to easily meet its obligations, then demand is high. The same applies the other way around. A good example of this is Greece. People are afraid that Greece may go bankrupt and therefore Greece must offer higher interest rates to still attract investors. This is at the expense of their own budget. There is less money to invest and to pay off the national debt. One theory as to why the German government bonds are that this is partly because the other bonds are seen as very unsafe, partly as a result of the credit crisis. All those investors then buy German bonds en masse.

Buy German government bonds immediately

In Belgium and the Netherlands, government bonds must be purchased through the bank. This means that you will still lose your investment if the bank goes bankrupt. Not that the chance is very high, but it has happened at a number of banks in recent years. With German government bonds it is possible to buy them directly. This can be done via the so-called Finanzagentur. That is the German treasury where you can open a treasure chest directly. This is also possible for foreigners. You will need to complete a number of German documents for this, so a command of the German language is recommended. You can open an account with this service by completing the Eröffnung eines Schuldbuchkontos form and sending it by post or fax. You can find this form by entering the title into Google. The money is quite easy to transfer via IBAN. This can be done for free through any bank. As a foreigner you also do not have to pay tax in Germany. Of course, you must report any profits to the Dutch tax authorities.

Short-term German government bonds

A disadvantage of this Finanzagentur is that it is only possible to buy short-term government bonds. Through them you can only purchase government bonds with a maximum term of 8 years. You cannot make long-term investments for, for example, 30 years. It is also only possible to buy short-term German government bonds through Dutch banks.