Status: 10/29/2021 8:14 a.m.
In the Corona crisis, many could barely spend their money. Since then, there has been even more in non-interest-bearing current accounts – which leads to high losses when prices rise. There is no shortage of alternatives.
The total wealth of German households is racing from record to record. In July it exceeded the gigantic seven trillion euros threshold for the first time, according to calculations by the Bundesbank. Nevertheless, many people find it increasingly difficult to increase their savings. Because many consumers have been stashing more money in their current accounts and in low-interest savings accounts since the Corona crisis, their assets are steadily losing value. This is especially true in times of rising inflation.
According to calculations by DZ Bank, deposits, bonds and insurance will be devalued by an average of 2.3 percent this year. The resulting loss of purchasing power in private financial assets is likely to amount to 116 billion euros. That is around 1,400 euros per person, says Michael Stappel, chief economist at DZ Bank and author of a study on the savings behavior of Germans.
Passbook is still very popular
The reason for the high losses in value is the fact that many people still invest their savings predominantly in current accounts and / or traditional savings accounts. In a Postbank survey, both are more popular than they have been in ten years. According to this, 62.5 percent of savers are currently parking money in the non-interest-bearing checking account. Ten years ago it was only 38.2 percent. Almost every second saver also uses a classic savings account, which is also a high.
According to the survey, the popularity of overnight money accounts has also increased, although more and more credit institutions are charging penalty interest for higher amounts. Postbank has found that 30 percent of German savers prefer to store their money at home, a good ten percent more than last year.
Losses from inflation
A Yougov survey on behalf of the comparison portal Check24 also came to the result that in the course of the pandemic, above all the investments in the current account and the bunkering of cash increased – also for larger sums, especially since trips have been canceled, restaurants and retailers close for months had to. According to the survey, a third of German citizens have more than 5000 euros in their current account or keep it at home in the form of cash. With four percent it is even more than 50,000 euros.
According to calculations by DZ Bank, 28 percent of the total financial assets of private households are in sight deposits such as current accounts and in the form of cash. “This means that the investment backlog has reached a record this year,” says economist Stappel. It is apparently not clear to many people that their financial assets stored in this way are losing value at a rate of inflation of currently 4.5 percent. “Every third saver does not even know this connection,” says Karsten Rusch, an expert on securities at Postbank.
Increased interest in securities
On the other hand, a rethink seems to be taking place. Even if many Germans are still very risk averse when it comes to their investments, awareness of stocks has increased during the pandemic. In the first half of 2021, according to the DZ-Bank study, private households invested more than double what they spent on stocks and funds in an average pre-crisis half-year. “It is still too early to speak of a new equity culture, but there is a hype surrounding securities. Almost nine percent of financial assets are now in shares,” explains Michael Stappel.
This statement is also confirmed by the Postbank survey. According to this, 31 percent of those surveyed stated that they also rely on securities when saving. In a similar survey in 2011, this proportion was 17.3 percent. Last year it was 29.9 percent. Nevertheless, the share of securities savings in this country is still significantly below the level in most of the neighboring countries or the USA.
It doesn’t work without stocks and funds
“In the current environment of low interest rates, you can’t avoid investing in stocks and funds if you want to compensate for inflation,” says Postbank expert Rusch. DZ Bank economist Stappel expresses himself similarly. Because the compound interest effect has largely disappeared and inflation is picking up again, private households would have to set aside more in order to achieve their savings targets, according to the expert. Private investors are all the more forced to open up to alternative investments with higher potential returns. In plain language, this means: if you want to achieve a return above inflation, you have to take higher risks – that is, invest your savings in listed securities.
DZ Bank does not expect inflation to decline until next year at the earliest – to 2.2 percent. Because interest rates are expected to remain unchanged, there is a so-called negative real interest rate. The savings on sight and call money accounts lose value again. This form of saving is therefore hardly suitable for long-term asset accumulation, for example for old-age provision. Banks and, in the meantime, even savings banks are therefore recommending increasing the use of securities. But politics must finally react, according to DZ Bank, which like many others is in favor of reforming state-subsidized and funded old-age provision, i.e. the Riester pension.
ETF vouchers at the supermarket checkout
Some banks are now taking unusual approaches to take away people’s fear of the capital market and lower their inhibitions. The Berlin Quirin Bank, for example, with its subsidiary quirion, offers voucher cards for stock market index-based asset management – at the tills of the Edeka supermarkets. The cards with a balance of 25 euros, 50 euros or 100 euros are activated at the supermarket checkout and can then be redeemed online. The bank wants to “reach those who have not yet dealt with investing in the capital market”.