Keeping money together instead of investing: Germans are anxiety savers
Traditionally, German citizens are known as a nation of savers. Even in 2024, this has not changed, as confirmed by the latest Debtor Atlas Germany. This year, however, the desire to keep money together is a different motivation than before: We have become fear savers who want a nest egg on the high edge out of fear of inflation, job loss or war. But is that such a good idea? Especially since the money invested correctly would provide a return opportunity that many Germans miss out on.
Overindebtedness is declining, but...
First, the good news: According to the Debtor Atlas Germany 2024, which the Creditreform published in November, the number of over-indebted people in Germany has fallen slightly this year. Anyone who is unable to meet their financial obligations in the long term is considered over-indebted. According to the information file, 5.56 million people were affected, 94,000 fewer than last year. It was also said that this was the lowest figure since evaluations began in 2004. The over-indebtedness ratio, i.e. the proportion of over-indebted people in relation to all adults, has also fallen from 8.15 to 8.09 percent.
However, this decline is largely not due to the fact that German citizens want to realize their dreams or achieve investment goals by saving. Rather, the main reason is probably so-called “anxiety saving”: Many Germans refrain from consumption out of fear of an uncertain future and stop making major purchases whenever possible. This trend is reinforced by political and economic uncertainties — including the Ukraine war, the economic situation in Germany and the elections in the USA.
A little caution and precaution are of course appropriate, as most cases of over-indebtedness (over 18 percent) are still caused by unforeseeable events such as illness, addiction or an accident. Job loss and installment loans are also important reasons for over-indebtedness. The latter is proven by data from the Debtor Atlas, which Michael Goy-Yun, managing director of Creditreform Boniversum and microm, explains: “We are seeing a further increase among young and consumer-oriented people. This development corresponds to the increasing demand for installment loans and so-called “buy now, pay later” offers.
Saving has risks and side effects
Instead of taking out expensive installment loans, it is worthwhile to set aside money in good time for your own small and big wishes. Most Germans do the same:
According to the Federal Statistical Office, they saved around eleven percent of their disposable income in the first half of 2024. This corresponds to an average monthly amount of 280 euros per inhabitant. Compared to other industrialized countries, this is almost exemplary. According to the Organization for Economic Cooperation and Development (OECD), private households in Italy set aside significantly lower shares of their disposable income last year at 0.3 percent, in Japan 2.8 percent and in the USA at 4.7 percent.
Savings goals and the necessary discipline are therefore certainly there and, as already mentioned, lead to falling over-indebtedness. However, setting aside money alone does not build up wealth. In other words, the money saved is consumed by inflation. It is therefore particularly important that Germans say goodbye to their savings account mentality. According to the Financial Barometer 2024 from J.P. Morgan Asset Management At 43 percent, savings accounts remain the most frequently used form of investment by Germans. This is followed by overnight and fixed-term deposits with 41 percent and investment funds and ETFs with 32 percent. After all, the trend is correct: In 2022, only 24 percent of those surveyed had funds or ETFs in their portfolio. As a result, the gap between savings accounts and funds has significantly narrowed. At eight percent, bonds are not very common among Germans, where cryptocurrencies are owned by 15 percent of German citizens.
Use return opportunities to build up wealth
The bottom line is that almost half of Germans still use low-interest savings accounts as an “investment,” they miss out on attractive return opportunities that are so important for building up wealth — whether for savings goals or as crisis protection. One DZ Bank calculation shows how expensive incorrect saving behavior can be. She has investigated how wealth would have developed if households had focused less on saving during the period of low interest rates and instead invested more in equities. The result: According to the latest analysis, private households' wealth would have brought in 715 billion euros more since 2011 through equity investments. And that even without taking into account dividends.
In addition to exchange-traded assets such as stocks, ETFs, funds or bonds, “tangible” tangible assets should not be missing from any portfolio. This asset class includes, for example, gold, real estate and collectibles, which are largely independent of the usual fluctuations on the stock market and can therefore balance the overall portfolio.
Until now, however, tangible assets and even private equity have primarily been reserved as investments for institutional or very wealthy private investors. Thanks to FINEXITY, retail investors can now also benefit from the return opportunities offered by these alternative assets. This is because the relevant tangible assets are simply “broken down” into digital shares (starting at 500 euros) and can be traded flexibly on the marketplace. This gives investors access to high-yield, tokenized private market investments that diversify and optimize the portfolio regardless of the investment horizon.
