Investing instead of saving!

When it comes to wealth creation, many Germans should rethink

The somewhat cumbersome term “savings rate” refers to the part of net income that is not consumed. According to the European statistical authority Eurostat, the savings rate in Germany is now over 17 percent (including contributions to retirement plans). Here it is: The European average is less than 10 percent! As a result, the Germans are not only European champions when it comes to saving money, but also true oddballs. In the following article, we'll tell you why many of us should seriously reconsider our wealth creation strategy and what better alternatives there are to savings accounts & Co.

Traditional saving has become bad business

The older among us will remember federal treasury bonds with melancholy: These were savings products issued by the Federal Securities Administration, which made saving pure pleasure with attractive interest rates of up to five percent and completely without exchange rate risk. Today, due to the low interest rate policy of the European Central Bank (ECB), there is virtually no credit interest for conservative savings strategies such as the savings account. If we also take inflation into account, this means that the money in the savings account is not only no longer, but actually even less due to the loss of purchasing power.

Investing as a better strategy: building wealth with stocks or real estate

It is true that most German savers now know that their traditional savings products, such as savings accounts or fixed-term deposit accounts, are no longer suitable for creating wealth. Nevertheless, a great many people still stick to this “saving” because it does not imply any risk but — as in the case of retirement plans and life insurance — a sense of security. All true to the motto: Better a sparrow in your hand than a dove on the roof.

In this case, the “dove on the roof” is the option of significantly faster asset growth, but this is associated with a high risk of total loss. At least that is the opinion of many “bargain hunters.” As proof, for example, the bursting of the dot-com bubble, which also affected many private shareholders at the time, is cited. That's certainly true in parts, but...

When it comes to equities, a long-term strategy is particularly important

Building up wealth sustainably with stocks is not about quick profits and certainly not about short-term speculation that involves a very high level of risk. On the contrary, it is about achieving reasonable returns over a long period of time. The risk remains manageable, because downward price fluctuations in companies with a sustainable business strategy are usually just a snapshot. So let's simply call this long-term equity strategy a modern form of saving, which, by the way, is already being carried out much more intensively in Scandinavian and Anglo-Saxon countries than in Germany.

Modern real estate investments offer transparency, flexibility and risk distribution

As another very good way to build up sustainable wealth, we would like to recommend modern investment in real estate. That's right, buying or investing in real estate has involved considerable bureaucratic effort, the complexity and cost intensity of which many potential private investors shied away from despite attractive returns. In the end, the money often ended up back in the savings account. But pioneering providers such as FINEXITY are now offering you much more up-to-date investment opportunities that make the purchase of real estate shares easier, more transparent, more flexible and more secure. With just a small amount, you can become an investor and share the investment risk with other investors who invest in the real estate project just like you do. And your return on project revenue? This places every savings account very far off the beaten track.