The Bernabeu outfit visit Schalke in the first leg of their last 16 clash on Wednesday, hoping to boost their chances of claiming a first European title since 2002.
And, with Real still on course to claim an historic first-ever treble of La Liga, Copa del Rey and Champions League crowns, Bale feels Carlo Ancelotti's men are up for the challenge.
"We know the Champions League is a big competition with all the best teams in it, so we know it is going to be difficult," he is quoted as saying by FIFA.com.
"I think we are ready, we believe we can win every game so we'll go over there and hopefully come back with the win."
The fixture is of particular interest to Real legend Raul, who also spent two seasons in the Bundesliga with Schalke, and the former Spain striker admitted his initial disappointment at not being able to play in such a match.
"At first I thought I'd love to play," he told Schalke's official website. "For which team? Quite simply - in the arena for Schalke and the Bernabeu for Real.
"I must admit in all honesty that it would be hard for me to enter into such a big game against one of my two teams.
"So I'm actually quite happy to enjoy the whole thing as a fan from the observer perspective."
