Your brokerage account

A Depot is an account for securities. A current account holds money. A Depot holds shares, ETFs and other securities. It almost always comes with a cash account. Purchases are paid from it, and money from sales or dividends lands there. The company that runs your Depot and passes your orders to the exchange is called a broker, or custodian bank.

Roughly speaking, there are three types. A branch bank is the classic bank with local offices. You can talk to someone in person, but trading and account fees are often higher. An online broker, often a direct bank, has no branches and works through a website and app. It usually offers many trading venues and securities at lower cost. A neobroker is built entirely around the smartphone. It is especially easy to use and often very cheap, sometimes with fewer trading venues or features. Which one suits you depends on what matters most to you: advice, choice or simplicity.

Skip the ads and use a plain checklist. What does a buy or sell cost? Is there a fee for the account itself? Can you set up savings plans, and what do they cost? Which trading venues can you use? Does the provider withhold German tax automatically, or will you have to handle it yourself? Which deposit protection covers the cash account? And check that the provider is licensed by BaFin or another European regulator.

A fair worry, with a reassuring answer. The securities in your Depot still belong to you, not to the broker. In German they are called Sondervermögen, separate assets. They are held apart from the bank's own money and do not become part of the insolvency estate. You can ask for them to be handed over or moved to another Depot. That can take time and be a hassle, but your shares stay yours. Keep in mind: this protects you from the broker failing, not from prices falling. Deposit protection, by the way, covers cash only, not securities.

You can usually open a Depot online. You enter your personal details and your tax ID, then answer questions about your experience with securities. That is required by law and helps warn you about products that may not suit you. Next you verify your identity, often by video call or with the online function of your ID card. Once the account is active, you transfer money to the cash account. Only then can you buy. With many providers, simply having a Depot costs nothing, and you do not have to use it right away.