Zero percent on your savings account - How should you adjust your savings habits?
Savings accounts are no longer worthwhile for more and more people. We have been in a phase of low interest rates for years. As a result, interest rates on many savings accounts are virtually zero. This is a big problem for investors. Nevertheless, many Germans still rely on savings accounts, although there are certainly alternatives on the market.
Savings accounts are a threat to wealth
A savings account is simple and easy to understand. You lend your money to the bank and receive interest as a thank you. But as comparison services such as Moneyland show, savers receive very low interest rates at many banks or none at all. As a result of the inflation rate, which stood at 1.6 percent in February 2019, investors are actually losing money as a result. This negative real interest rate not only makes the classic savings account unattractive, but also poses a risk to investors. Unfortunately, it currently seems that this trend is not going to change anytime soon. The European Central Bank, or ECB for short, is unlikely to raise interest rates to combat inflation.
Savings accounts in Germany
More than 60 percent of Germans still invest their money in a savings account. Many people still know the savings account from a time when it was still worthwhile and may not even realize that there are better ways to invest their money today. Even at foreign banks, such as in Switzerland, things look grim for the savings account. In addition, account management in a savings account is usually very inflexible and slow. Many savings account savers also like to argue that savings account investments are absolutely safe. For many people, outdated savings accounts are still considered the safest way to invest money. However, other forms of investment, such as overnight money, are at least as secure.
Germany is conservative when it comes to saving
Germans are only slowly adopting other forms of investment. Only around one in five owns real estate or fixed-term deposits. Even fewer Germans have invested their money in stocks. Just nine percent of German savers rely on the stock market. Call money accounts, fixed-term deposits and Riester products may be more popular than stocks, but these alternatives still do not reach the popularity of savings accounts. Interestingly enough, a good proportion of Germans, namely almost 17 percent, do not invest their assets in any form of investment.
Possible alternatives for savers
Especially with today's living situation, it can be worthwhile for you to invest your money in real estate. As a result of internal immigration to metropolitan areas, the demand for urban living space will steadily increase. Even with just a small amount of equity, there are now numerous ways you can invest your money in real estate. Real estate prices are likely to continue to rise, particularly in large cities in the state, such as Berlin, Frankfurt or Munich. Real estate is therefore currently perhaps the most attractive and exciting form of investment in Germany. The location is of decisive importance for the value of a property. You should therefore definitely seek advice beforehand before you decide to invest in real estate. Not every region is developing at the same rate. Many banks also offer you the option of investing your money in fixed-term deposits. There are many different products on the market today under the umbrella term fixed-term deposits. In general terms, your money is invested for a fixed period of time and at a fixed interest rate. However, the invested money is out of reach for you in time and you will only get it back when the pre-agreed period has expired. So if you are in urgent need of flexibility, this is not necessarily the best offer. You are significantly more flexible with a call money account. There is no notice period and your entire capital is available to you at any time. Many banks also have significantly better interest rates than a normal current account or a savings account. However, you cannot transfer money with your call money account.
Although savings accounts are in many cases rather harmful to wealth, they remain popular. But if you're willing to consider other options as well, you have a wide range of different investment options. The German real estate market is booming and many banks also offer interesting alternatives to conventional current accounts or savings accounts.
