Building society savings vs. ETF savings plan

Two popular forms of saving compared directly – but they pursue completely different goals.

Home savings contract (Bausparvertrag):

• Interest on savings: ~0.5% p.a. (NEGATIVE in real terms with 2%+ inflation)
• Arrangement fees: 1–1.6% of the contract sum (e.g. €500–800 for €50,000)
• Housing construction bonus: 10% on max. €700/year = €70/year (singles, income limit €35,000)
• Loan interest: 1–2.5% guaranteed – the actual advantage
• Earmarking: must be used for housing purposes (buying, building, renovating)

ETF savings plan:

• Historical return: 7–8% p.a. (MSCI World, long-term)
• Costs: 0.10–0.22% TER (extremely cheap)
• Flexibility: can be sold at any time, no earmarking
• Risk: short-term fluctuations (but positive in the long run)

Return comparison (€200/month, 15 years):

• Home savings: €36,000 paid in → approx. €37,500 (incl. bonuses, after costs)
• ETF savings plan (7%): €36,000 paid in → approx. €63,000
• Difference: ~€25,500 in favour of the ETF savings plan!

When a home savings contract still makes sense:

• You specifically plan to buy a property in 5–10 years
• You want to lock in today's low loan interest rate
• You meet the income limit for the housing construction bonus
• You need the discipline of a fixed savings contract

Conclusion: for pure wealth building: ETF savings plan. For concrete property plans: a home savings contract can make sense as interest rate protection – but ONLY as a small part of the plan.