DAX40 ETF & Index: Is investing in Germany's leading index really worth it?

The DAX40 dominates discussions in German financial markets – but many investors don’t really know why this index is so important and how to actually invest in it. This article shows you how to earn money flowing into the German economy through ETF DAX 40 and other methods.

The Foundation: What’s Behind the DAX40 Index?

Since 1988, the DAX has documented the dynamics of the German economy. With 40 of the largest publicly traded companies, the index provides a broad base for investors – from Siemens and SAP to Volkswagen and BMW to Deutsche Telekom. Companies are weighted by their market capitalization, meaning: the larger a corporation, the more its development influences the DAX40 price.

The numbers tell a clear story: what started in 1988 at a symbolic 1,000 points is now listed at nearly 18,500 points. If you had invested 10,000 euros back then, today you would have over 185,000 euros – corresponding to an average annual return of about 8.44%.

Why the DAX40 is Attractive for Beginners

Diversification instead of risk: With 40 companies from different industries, your money is spread out. This is a major advantage over individual stocks. The implied volatility of the DAX40 has been slightly lower than the American S&P 500 over five years – with the same risks but different opportunities.

Liquidity without compromises: The DAX is traded millions of times daily. That means you can enter and exit quickly without fearing large price jumps.

Multiple entry points: Whether via ETF DAX 40, futures, or CFDs – the market offers flexibility for every type of investor and capital.

The Shortcoming: Performance Comparison with the USA

Let’s be honest: the S&P 500 has significantly outperformed the DAX40 over the past five years. While the German index increased by about 48%, the American rose by around 85%. The reason isn’t just better performance – both indices had similar volatility – but the economic dynamics: US tech giants grew faster than German industrial giants.

Practical Investing: Your Three Ways

The classic way: ETF DAX 40 for long-term investors

The ETF DAX 40 is your entry ticket for patient wealth building. With an exchange-traded fund, you effectively hold shares in all 40 companies – without having to buy them individually. The iShares Core DAX ETF costs you only 0.16% fees per year. For comparison: actively managed funds often charge 12 times that.

The DAX40 ETF works automatically – new companies are added, weak ones removed. You save time and nerves. A ETF DAX 40 savings plan with 100 euros monthly can grow into solid wealth over 30 years.

The quick variant: DAX futures for pros

Futures are standardized contracts traded on Eurex in Frankfurt. This involves large positions with leverage – not intended for beginners. The contract size is fixed: one point = 25 euros. If you want to start with little capital, it’s better to look at alternatives.

The flexible option: DAX CFDs for active traders

CFDs (Contracts for Difference) are the middle ground. Here, you can build real positions with 100 euros or less, work with leverage, and bet on rising and falling prices. The risk? With leverage, you can also quickly incur losses – but the flexibility is unmatched.

Trading hours: DAX ETFs run from 08:00-20:00 at most German exchanges, futures from 08:00-22:00 on Eurex, CFDs vary depending on broker.

The Historical Reality: Growth with Turbulence

The DAX40 has grown by a factor of 18.5 since 1988 – but not in a straight line. The Dot-Com crash in 2000, the financial crisis in 2008, and the Corona shock in 2020 showed that markets fluctuate. But those who held on long-term were rewarded. This makes the DAX index a success story of the German economy – volatile, but profitable.

Conclusion: DAX40 as Part of Your Strategy

The DAX40 is not a gambling bet but a solid foundation for long-term wealth accumulation. The ETF DAX 40 costs little and works automatically. The past return of 8.44% per year over 36 years speaks for itself – even if the American S&P 500 performs better in the short term. If you want to invest in the German economy and don’t want to pick individual stocks, the DAX ETF is a good choice.