Investing in funds How to invest in funds in 8 steps in 2026 

Those who want to invest in funds in 2026 have a greater choice than ever before, and at the same time are obliged not to just leave their money in the savings account. Inflation in Germany was expected to be 2.9% in April 2026.¹ Anyone who only holds their money in a savings or overnight money account will lose real purchasing power. 

However, not all investors have the time or experience to deal with current stock market price developments on a daily basis. So, how can equities be used to invest money securely and profitably without having to be an actual financial expert?  

It is worth taking a closer look at the financial instrument of investment funds (funds for short). They offer retail investors the opportunity to invest in different securities at the same time - beyond equities - without a great deal of time and money. The fund managers who manage and invest the fund’s assets are responsible for the actual investments.

However, funds don’t just run by themselves either. Like any financial investment, they also involve certain risks and characteristics that you should take into account before making your investment decision. That’s why this article gives you the most important information about funds and how to invest your money in funds in 8 steps

What is a fund?

An investment fund gathers the capital of several investors into one fund asset, which is usually managed, invested and reallocated by fund managers. The special feature of funds is the diversification of investments and thus also a certain risk diversification.

This is because most of the time - not always - an equity fund manager, for example, invests the entire capital in several, rather than just one share, or in the case of a bond fund, not just in one bond, but in several at the same time. The type of fund or the fund manager’s strategy determines which assets are invested in.

Other funds, such as closed-end real estate funds, in turn invest capital in just one single asset. Although such funds often have higher return opportunities, they are also associated with high risks as there is no diversification.

In addition, Closed Funds are used to enter into investments that are attributed to a different legal basis than Open Funds. Closed-end funds therefore offer no or only comparatively little legal protection for their investors’ assets.

From active to accumulating: how funds differ from each other

Funds cannot always be clearly distinguished from one another. This is because certain aspects often overlap, so that a fund can be assigned to several categories at the same time. Take a red Tesla Model 3 as an example: it can be categorised as an electric vehicle as well as a red saloon. This refers to the functional principle (electric motor) as well as the shape and colour (red saloon).

Similarly, funds are differentiated according to characteristics such as form and function. For example, an equity fund can also be a sustainable solar fund at the same time if the fund assets are invested in sustainable companies in the field of solar energy.

But there are also specific criteria that differentiate different types of funds.

Open-end vs. closed-end funds

Open-end funds are traditional investment funds. As an investor, you can buy units in these funds at any time and sell them again at your desired time at the current redemption price. The number of fund units available for sale is therefore not capped and is not linked to any specific commitments.  

The fund units themselves are often not expensive, with the result that such funds are also suitable for cautious investors who want to start with less investment capital. Additional protection is provided by the strict legal requirements that open-end funds must meet in order to be able to sell their unit certificates to investors.  

Closed-end funds are a form of corporate investment and are not traded on the stock exchange, meaning that the fund units cannot be acquired or sold arbitrarily. The fund assets are accumulated from investors within a certain period of time and used for one or a few large projects, such as an office property or a shopping centre.  

The minimum holdings usually only start at around EUR 5,000 and extend into the six-digit range. The maturity of closed-end funds is often a long period of 10 to 30 years. As the shares cannot be sold on the stock exchange, a so-called replacement investor must take over the shares in the event of a planned sale.

Due to their legal basis as a corporate investment, these funds offer only limited protection for investors. Closed-end funds therefore have significantly more pre-requisites than open-end funds and rely on a high risk appetite, high initial capital and, due to the long term, on long-term financial planning.

Actively vs. passively managed funds

Active funds are, as the name suggests, funds actively managed by a fund manager. His task is to observe and analyse various markets such as the tangible asset or securities market, which often involves other companies and analysts.

Based on current market research, the fund manager seeks to identify assets that are as close as possible to the investment strategy of the relevant fund in order to align their investment decisions.  

For this purpose, fund managers analyse existing data that has proven helpful in the past in order to make as specific a diagnosis as possible for the future. However, even the best analyses cannot reliably predict the future despite all the specialist knowledge, which is why active fund management is always associated with certain uncertainties.

Active funds also have higher costs than passively managed funds due to the active management and service provided by the fund managers.

Passively managed funds are not managed by experts, but usually map an existing stock exchange index on a computer-controlled basis. A DAX fund, for example, comprises shares in the 40 companies listed on the DAX. By investing in such a fund, you participate directly or indirectly in the development of these companies and thus in the development of the DAX.  

The benefit of passive funds lies in the low costs. Management fees are significantly lower here than for actively managed funds, often below 0.5%. The most popular passively managed funds include ETFs, i.e. exchange-traded index funds. Investors in passive funds are therefore dependent on market fluctuations and possible price drops, which – unlike actively managed funds – cannot be avoided or mitigated by switching.

Asset funds such as hausInvest, klimaVest or infraVest are generally actively managed, because real assets such as real estate, wind and solar farms or infrastructure systems must be operated professionally. Which property is bought, leased or sold at what price, which power purchase agreements are extended when, which radio masts fit in which region - these are active asset management decisions that an active asset management team must make continuously.

Accumulation vs. distribution funds

Accumulation funds are those that do not pay you your return at regular intervals, but reinvest your profits. If you have invested EUR 10,000 and receive a return of EUR 500 at the end of the year, this amount will be added to your investment amount for accumulating funds.  

The advantage of accumulation funds is the compound interest effect, which is to your benefit. In the process, what you have earned in returns in the first year is added to your original investment amount, which is why your investment amount increases steadily and you earn more and more returns from the second year onwards. However, the disadvantage of such funds is that you will not receive your return until you redeem your fund units.

However, most funds are distributing funds that pay you the dividend you earn on a regular basis. So if you are entitled to a return of 500 euros on your 10,000 euros investment capital at the end of the year, you will receive this in your bank account. This means that your profit does not continue to earn interest, but you can dispose of it freely – it is not for nothing that such profit distributions are considered by some to be a bonus month's salary.

Securities funds vs. tangible assets funds: two worlds, one vehicle

When we talk about “funds”, most people mean equity funds or ETFs. In fact, there are two fundamentally different worlds in which a fund can invest, and this is crucial for risk, return and correlation with the stock market.

Securities funds invest in equities, bonds or both. They offer high liquidity, but are directly dependent on sentiment on the stock markets. In the event of a crash, the proportions fall - sometimes significantly.

Instead, tangible asset funds invest in real assets: commercial and residential properties, wind and solar farms, power grids or radio masts. Their performance depends not primarily on daily prices, but on rents, electricity sales contracts, concessions and the long-term development of these assets. As a result, they are less dependent on the stock market and become interesting for more cautious investors who do not want to deliver their own money to the fluctuations of the stock markets.

Commerz Real, for example, has been investing in tangible assets for over 54 years and has consistently built up its fund offering around this. Private investors can currently choose between three tangible asset funds:

• hausInvest - an open-ended real estate fund that invests in commercial real estate worldwide. Classic tangible asset component for a broadly diversified, exchange-independent basis.
• klimaVest - an ELTIF that invests in wind and solar farms as well as electricity grids in Europe. Combination of stable cash flows and contribution to the energy transition.
• infraVest - ELTIF with a focus on Germany, which invests in critical infrastructure (supply, social, energy, transport, communication).

All three funds together: They aim for current income from real values rather than company valuations on the stock market. This makes them an alternative for anyone who wants to diversify without having to deal with stock fluctuations.

Fund opportunities and risks: everything you need to know

Fund returns: what you can expect from your investment

The return on your fund investment ultimately depends on what kind of fund it is and which assets are included in the fund. In principle, the return of a fund can be attributed to how diversified it is:

while broad diversification can reduce risk, investors can also expect lower returns. According to the BVI fund association, German equity funds, for example, have achieved an average return of 5.7 percent over the last 10 years.²

Funds and their costs: what fees do you have to pay?

Similar to returns, costs also depend on the type of fund. However, this is less about actual assets and more about whether the fund in question is actively or passively managed.

This is because passively managed funds are usually cheaper and have a total expense ratio (TER), i.e. a total cost ratio of all costs and fees incurred by a fund per year, of around 0.1 percent to 0.5 percent. Actively managed funds, on the other hand, involve a higher administrative burden, which means that the total expense ratio is slightly higher here.

The amount of the one-off initial charge (also known as the premium) due on the purchase of the fund units is not proportionate to actively or passively managed funds, but depends on who issues the fund units and who distributes them. These costs therefore vary depending on the provider or bank.

From theory to practice: how to invest in funds in 8 steps

Now that you have become familiar with the different fund types, their characteristics and risks, nothing stands in the way of your own fund investment. It is now important to apply your new knowledge if you want to invest in funds safely and profitably.

Step 1: Determine your investment objectives: What do you want to invest in funds for?

Investors differ – just like their preferences and visions for the future when it comes to their money. Defining your investment objectives is about starting here and finding out what you want to achieve when you invest your money in funds. Do you simply want to build up your private wealth or do you have specific intentions such as financing a home or providing for your children?

These different objectives affect how much money you should invest in funds over what period of time and also the risks you take with your investment. The more specifically you can define your investment objectives, the better you can plan your investment.

Step 2: Define your risk appetite: how safe should your investment be?

Funds can be assigned to different risk classes depending on their focus. Once you have determined your personal investment objective, the second step is to deal with the risks. Do you prefer to achieve high returns on your investment and take higher risks, or do you prefer to play it safe and know your money is well looked after? Your individual assessment is also important here.

Be honest, because the best investment should be tailored to you to avoid disappointment or uncertainty later on. If you don't have a high risk tolerance, then it is better to stay on the safe side and rely on stable and lower-risk funds. Even if you want to invest money for your children, for example, you are better advised with value-preserving products.

Ultimately, the investment objective determines your funds: For example, if you want to double your investment amount in 5 years, you will use fund products that are much more risky than if you aim for a plus of 50% in 30 years.

Step 3: Consider your investment horizon: how long would you like to invest in funds?

The term of your investment also affects which funds you are likely to consider and their risks and return opportunities. The reason for this is because aspects, such as minimum holding periods for shares or deadlines for share redemptions, differ depending on the product. You should therefore calculate whether or for how long you can dispense with your investment amount. There are three common periods of investment:  

1. Short-term investment horizon (1–3 years): Anyone who wants to prepare for retirement or secure the wealth they have earned, i.e. keep it in value over a short period of time, usually has an investment horizon of a few years. Investors who value safety cannot expect high returns over this short period of time. Those who speculate on high returns within three years, for example with equities or cryptocurrencies, must take corresponding risks and, in the worst case, accept a total loss. So if you only want to invest for a short time, it may well be the case that you will have to sell your shares at an unfavourable time and therefore have to accept significant losses.  
2. Medium-term investment horizon (3–10 years): If you invest your capital for at least three years, you have enough time and financial leewayto let your capital work at your leisure. Here, the investment capital can be divided between stable and slightly higher-risk products, such as equity funds or ETFs. This will allow you to achieve good returns, while the associated risks can be absorbed by more stable fund products.  
3. Long-term investment horizon (10+ years): An investment horizon of at least 10 years opens up a number of opportunities for you, for example, you can provide long-term and continuous pensions for your age. If you invest in funds to build up your assets, you can also take some risks during this period. This is because you then have plenty of time to withstand price fluctuations and wait for them to balance out.

But keep in mind: your fund investment depends on your situation – if you have an investment horizon of at least 10 years but do not want to take any risks, there are enough solid and low-risk funds available.

Step 4: Defining an investment amount: how much can you invest?

You now know the main requirements you should consider when investing your money in funds. But before you decide on a fund and buy units, you should know what financial resources are available to you for your investment.

Make a realistic assessment of your finances: What regular income and expenses do you have? Are there loans which you still need to finish repaying? Do you have a reserve to cover any repairs or new purchases?

Make sure you have considered all foreseeable costs before determining your investment amount. This is the only way to ensure that you will not have to access your investment amount again after a short time and pay high fees such as initial charges for this.

In doing so, determine not only a possible investment amount for a one-off investment, but also a conceivable monthly savings rate with which you can successively build up wealth building.

Step 5: Select a fund: how to find the right fund for you

Now that you have determined what amount you can and want to invest in funds, it is time to find the product that is right for you.

If you expect high returns on your investment while keeping your money available, an equity fund may be right for you. The higher the potential returns and liquidity of the fund, the higher the associated risks. Equity funds are therefore among the more risky fund products.

If you prefer safety and stable returns, an open-end real estate fund could be the right choice for you. Here, you do not have access to your money for around two years and invest in a low-risk, stable product. The hausInvest open-ended real estate fund is recommended here, which is one of the largest German real estate funds with 14.7 billion billion euros in fund assets and has a high level of diversification with over 145 investment properties worldwide.

For investors who want to invest their capital in a future-proof investment in the long term, it is worth taking a look at the klimaVest renewable energy fund: The tangible asset fund invests in over 43 wind and solar farms as well as electricity grids throughout Europe and ensures stable cash flows and reliable return opportunities thanks to long-term purchase agreements.  

At the same time, investors are adding a new and future-oriented asset class to their portfolio with an investmentin renewable energies, which will become more important in the long term as energy demand continues to rise.

Investors who want to invest in the backbone of the economy should take a look at infraVest. The infrastructure fund with a focus on Germany is an ELTIF 2.0 and invests broadly in critical infrastructure such as utilities, social services, energy, transport or communications. Infrastructure assets are considered stable in the long term because their income often comes from regulated or concessioned contracts and are therefore largely independent of the economy and the stock market.

Step 6: Select a one-time investment or fund savings plan: your fund investment pathway

Before your investment can really start, you have to decide: One-time investment or savings plan? The name says it all: With a one-off investment, you invest a fixed amount in the fund of your choice in one go. Whether it remains at that or if you want to invest further amounts in the fund after a certain period of time is of course up to you.

In principle, however, this type of investment is more suitable for you if you want to invest higher amounts, for example how to invest 50,000 euros or 20,000 euros. These can be your earned assets, a cancelled savings book, or you may have received an inheritance and now want to invest it.

If you opt for a fund savings plan, you will invest smaller amounts at regular intervals, for example monthly or quarterly. The investment amounts are usually flexible and can be adapted to your situation, depending on how much money you have available.

For investors focused on safety, such savings plans offer the benefit of the cost-average effect. This means that fluctuations in the level of unit prices can be repeatedly compensated for by regular payments and investors often even pay lower average prices in the long term.

In addition to these two common options, you can also take advantage of a hybrid model by investing part of your assets in the form of a one-off investment and also investing in funds in regular savings plan instalments.

Step 7: Determine the right time: when to start your investment

The sooner you invest in funds, the longer your capital can work for you. So start early rather than late – and ideally right now.  

Cautious or inexperienced investors in particular will always find a reason to postpone the investment for another time in the future. However, this wastes valuable time that could be used to maintain or increase your capital. Your money is in expert hands, especially with actively managed funds: They save you from time-consuming market analyses and you don't have to wait for the next price crash to take the deciding step.

Step 8: Start investing: open a custody account and lean back

In order to be able to invest your money, you need a custody account where your securities are held and managed. There are many different providers of custody accounts and they all offer different services and have different charges, from your regular bank to online banks and specialised fund brokers.

Investors should first and foremost study the cost table of initial charges, as these are often the highest fees. Therefore, make sure that your securities account provider offers as many different funds as possible as well as funds without initial charges. Cheaper online banks are usually more suitable for this than your regular bank.

Your regular bank can also be a good place to open a custody account if personal loyalty is more important to you than the lowest possible initial charges. But there are a few things to keep in mind here, too: Many regular banks now generally only sell their own financial products. In such a case, as an investor, you must therefore be satisfied with investment products that may not be quite up to par in a direct comparison with others.

It is therefore best to inform yourself in advance as to which funds could be of particular interest to you. In the next step, you can compare different custody account providers and the funds they offer in order to find the best offer for you and open the right custody account for you.

To sum up, once you know your goals, your risk tolerance and your investment horizon, and once you have determined your investment amount and selected a suitable custody account provider, you are ready to proceed with your investment. Use funds for wealth building or for your pension and let your money work for you without any worries. We wish you every success with your fund investment.