Building savings contract or investment plan — which pays off more?

How does a Bausparvertrag work?

A German Bausparvertrag combines a savings phase with the right to a low-interest building loan. During the savings phase you pay monthly contributions that earn a fixed but typically low interest rate. Once a certain percentage of the contract sum is reached and minimum valuation numbers are met, the contract is allotted and you can take out a loan at the interest rate fixed at signing. A one-off closing fee (often 1–1.6% of the contract sum) applies.

Savings plan / ETF — the alternative

An ETF savings plan invests your monthly contribution broadly in stocks or bonds and benefits from compounding. Historically, globally diversified stock ETFs have returned roughly 5–8% p.a. long-term — with volatility. Unlike Bausparen the return is not guaranteed but there is no fixed closing fee. In Germany, capital gains are taxed at 26.375% (incl. solidarity surcharge), partially offset by the saver's allowance and partial exemption for stock ETFs.

Which option is right for whom?

Looking at pure capital returns, a well-diversified ETF savings plan typically beats a Bausparvertrag over long horizons in most scenarios. The Bausparvertrag shines when you actually plan to build or buy a home and want to lock in a low loan rate today — especially when rates are expected to rise. Government-supported variants (Riester, employer VL contributions) can also tip the math.

Important notes

• This is a model calculation, not personal investment advice.
• ETF returns are volatile — past performance is no guarantee of future results.
• With Bausparen, the right to a low-interest loan can outweigh the pure return comparison.
• Government bonuses (Wohnungsbauprämie, VL, Riester) can make Bausparen significantly more attractive.

Bauspar or savings plan: what really drives the decision

Comparing a Bausparvertrag with an ETF savings plan is essentially a choice between guaranteed safety and expected return. A German Bausparvertrag is regulated under the Bausparkassengesetz, the accumulated balance is covered by the statutory deposit guarantee of 100,000 EUR per customer and bank, and the savings rate is contractually fixed from the start. In return, savings rates have historically sat far below stock market returns, typically between 0.1 and 1.5 percent per year. On top of that comes the one-off closing fee of usually 1.0 to 1.6 percent of the contract sum, which weighs noticeably on the balance during the first years.

An ETF savings plan on a broadly diversified global index such as MSCI World or FTSE All-World has historically delivered roughly 5 to 9 percent per year on a nominal basis over rolling 15-year windows. That return is not guaranteed though, and single years can produce drawdowns of 30 percent or more. Anyone forced to liquidate during a weak phase realises those losses. This is the crucial point: the calculator runs a model with constant return — real-world performance is much more volatile.

The second, often underestimated aspect is the building loan itself: anyone who actually builds or buys after the savings phase can call the loan rate fixed today — a form of interest rate insurance. In a high-rate environment (e.g. 2023 with German mortgage rates above 4 percent), this bonus can completely flip the pure capital comparison. Conversely, anyone certain they will never need a building loan should look at the contract soberly — a low-yield savings product with fees.

The underlying formula

Both options compound monthly. For the Bausparvertrag the closing fee is deducted from the balance in month one; for the ETF plan the running cost ratio (TER) is subtracted from the gross return, and at the end the German capital gains tax applies to the profit:

BS_t = (BS_{t-1} + Rate - Gebühr_anteilig) * (1 + r_bs/12)
SP_t = (SP_{t-1} + Rate) * (1 + (r_sp - TER)/12)
Endkapital_SP_nach_Steuer = SP_T - max(0, SP_T - eingezahlt) * Steuersatz

Concrete worked examples

The scenarios below show how different the final capital can be — all at the same monthly rate of 200 EUR.

• 200 EUR per month, 15 years, Bauspar 0.5% on a 40,000 EUR contract sum with 1% fee: about 36,700 EUR final balance (36,000 EUR paid in).
• Same setup, but ETF plan at 5% p.a. with 0.2% TER: about 51,300 EUR after capital gains tax — roughly 14,000 EUR more than Bauspar.
• 200 EUR per month over 25 years, ETF at 7% p.a.: about 138,000 EUR net. With only 1% Bauspar interest, the contract reaches about 67,000 EUR over the same period.
• With an annual housing bonus of 70 EUR plus employer VL subsidy, the Bausparvertrag often catches up over short horizons under 10 years — but rarely beats the ETF over 20+ year horizons.
• Stress test: if the ETF crashes 40% in year 24, the final capital of example 3 melts to about 83,000 EUR. The Bausparvertrag stays stable — that is the value of the guarantee.

Limits of this calculator

The calculator assumes a constant return and constant savings rate. Real markets are volatile; an actual ETF plan can underperform the model in a bad decade and overshoot in a good one. Tax specifics like the German saver's allowance of 1,000 EUR per year (2024), the 30% partial exemption for equity ETFs, and the Vorabpauschale are not modelled — the real tax burden is usually lower for most investors. On the Bauspar side, bonus interest, follow-on contract options, and tariff variants with government bonus are not included. This page is informational and does not replace personal financial advice — for larger sums a fee-only independent advisor is worth the cost.

Frequently asked questions about Bauspar vs. savings plan

Is a Bausparvertrag still worth it in 2026?

As a pure savings vehicle, rarely — credit interest is usually below 1 percent, while overnight deposits and money-market ETFs currently pay much more. The Bausparvertrag still makes sense when a concrete plan to build or buy exists within 5 to 15 years and you want to lock in a loan rate today. In a low-rate environment that can reduce effective housing costs over decades.

How high is the Bausparvertrag closing fee really?

At most German Bausparkassen it ranges from 1.0 to 1.6 percent of the contract sum and is due once at signing. On a 40,000 EUR contract that is 400 to 640 EUR deducted from the balance up front. The fee is non-refundable even on contract termination — a sunk cost that depresses the effective return especially in the first years.

What happens to my ETF savings plan if the stock market crashes?

The portfolio value drops accordingly — historically broad global indices have seen drawdowns of 30 to 50 percent peak to trough (2000, 2008, 2020). If you keep contributing, you buy cheaply during the dip (cost averaging). If you have to withdraw, you realise losses. Rule of thumb: only put money into ETFs that you will not need for at least 10 to 15 years.

Can I combine the German Wohnungsbauprämie with an ETF savings plan?

The classic Wohnungsbauprämie is only granted on Bausparverträge and is capped by income (most recently 35,000 EUR taxable income for singles). There is no comparable direct subsidy for equity ETF plans. A mixed strategy can make sense: a small Bauspar contract sized to capture the bonus, plus a separate ETF plan for wealth building.

Which taxes apply to an ETF savings plan in Germany?

Realised gains and distributions are taxed at 25 percent capital gains tax plus 5.5 percent solidarity surcharge (effective 26.375 percent), optionally plus church tax. There is a saver's allowance of 1,000 EUR per year (2024), and equity ETFs enjoy a 30 percent partial exemption — so effectively only 70 percent of the gain is taxed. Since 2018 the Vorabpauschale also applies, taxing a small minimum amount annually.

Which is safer: Bausparvertrag or ETF savings plan?

The Bausparvertrag is safer in nominal terms — the paid-in capital does not fluctuate. Adjusted for inflation, even a Bauspar can lose real value when inflation outruns the savings rate (as in 2022/23 with over 8 percent inflation). A globally diversified ETF has historically never produced real losses over 15+ year horizons but can swing strongly in the interim. Honest answer: nominally Bauspar, in real long-term terms the ETF — assuming you accept volatility.

Related calculators

• Loan calculator — Once your Bauspar enters the loan phase: compute the monthly payment and amortisation schedule.
• Compound interest calculator — Shows the pure compounding effect — ideal to understand the savings-plan side of the comparison.
• Personal inflation calculator — Calculate how much purchasing power your final capital actually retains after 20 years.