Returns – Suddenly in the down economy

Despite the mini-interest rates, many savers have been able to increase their assets for years – thanks to the stock market. That has now changed.

from Mark Zydra, Frankfurt

The possessions of German households have shrunk for the first time in six years. Falling share prices in the first three months of the year and inflation of more than 1.5 percent have caused this decline, reports the Bundesbank in its monthly report. The financial assets of German households amount to just under six trillion euros, the minus amount in the first quarter of 2018 was 0.8 percent.

According to the Bundesbank, a large part of the Germans still deposit their money on savings accounts: just under 40 percent of their assets are in bank deposits & # 39; s and cash. Claims of real estate against insurance companies, for example in the form of life insurance, again represent about 30 percent, shares and shares in investment funds each about 10 percent. The property of the accommodation is not included in this list because of the more complicated pricing of houses and apartments. In calculating average returns, the Bundesbank follows precisely this relatively stable structure of financial assets in Germany.

Thanks to the long-term interest rate policy of the European Central Bank (ECB), the return on savings has been at a low level for a long time. At the same time, share prices have risen globally since 2009 and brave investors have been able to make huge profits, even in the period of record-low interest rates on the stock market. As a result, wealth has continued to grow in Germany in recent years. In 2015, the real return was even more than three percent, which was due, however, to the fact that inflation was almost zero at the time.

"I understand the dissatisfaction of the savers about the low interest rates."

In the meantime, however, inflation in Germany has risen sharply – depending on the month – from 1.5 to 2 percent, as a result of which real income continues to decrease. The international equity markets were unable to compensate for this effect in the first quarter due to price losses there. In the meantime stock prices have risen again, which indicates a quick better return.

"I understand the savers' anger well about low interest rates, but they build up their pension plans over several decades, putting the current interest rate somewhat into perspective," said President Jens Weidmann of the Bundesbank in an interview with the Frankfurter Allgemeine SonntagszeitungHe pointed out that there have been such phases in the past. According to the Bundesbank, for example, German savers had to absorb a loss of wealth of around two percent in 2001 as a whole (terrorist attacks in New York) and 2008 (outbreak of the financial crisis). In Germany, many citizens are primarily responsible for the ECB's zero interest rate policy for low returns. That's right, but there were also high-yielding periods in which savers lose members. At the end of the 1970s and the beginning of the 1980s, the very high inflation rates in the D-Mark times completely affected the then high nominal interest rates. Bundesbank President Weidmann said that the average asset portfolio in Germany still delivered relatively well in the current zero-interest phase. "Interest rates will also rise again during the normalization of monetary policy," said Weidmann, who also decided on the course of monetary policy in the euro area.

In the beginning, however, the zero interest rate should continue for a while. The ECB intends to raise interest rates at the earliest in the autumn of 2019.

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