Thursday October 14, 2021
Strong profits from investments
Germans are stashing more and more money
The pandemic is slowing down the economy properly, but the private wealth of Germans is still growing strongly. Overall, households have almost a trillion euros more than before the corona crisis. One reason for this is the increasing willingness to take risks when investing.
Even after the gradual easing of the corona restrictions, people in Germany kept their money together. At the same time, they benefited from the rise in stock exchange prices – financial assets climbed to a record high in the second quarter. According to the Deutsche Bundesbank, the wealth of private households from cash, securities, bank deposits and claims against insurance companies rose by 159 billion euros compared to the first quarter to 7,325 billion euros. At the beginning of last year, the financial assets were still at 6,400 billion euros.
Economists expect a further increase in the course of the year. The Bundesbank data does not reveal how the enormous sum is distributed. Although the gradual easing of the restrictions to combat the corona pandemic boosted consumer spending in the second quarter, the savings rate fell, according to data from the Federal Statistical Office. Still, people kept putting money on the high edge. Cash and bank deposits in current and overnight accounts, for example, made a good 2910 billion. Euro continued to be the largest item at the end of June. Around 52 billion euros were added in the second quarter. Savers do not earn anything because of the low interest rates, but they can access their money quickly if necessary.
At the same time, the more risk averse savers in Germany are increasingly daring to go to the stock market. “Liquid or low-risk forms of investment are still very popular overall, but private households have been increasing their exposure to the capital market for years,” the central bank concluded on Thursday. In the second quarter, for example, private households bought investment fund shares for 24 billion euros and shares for 7 billion euros. According to the Bundesbank, valuation gains on shares and investment fund shares played a significant role in the growth in financial assets in the second quarter.
Asset growth is likely to take hold
According to the information, private households invested a little less money than in the previous quarters in insurance and other pension products. Here inventories increased by around 20 billion euros to around 2529 billion euros. DZ Bank expects a further increase in financial assets in the current year. According to DZ Bank economist Michael Stappel, people are likely to save less than in 2020 thanks to the increasing relaxation of the corona restrictions. Nevertheless, financial assets should rise to 7.6 trillion euros thanks to increases in the value of stocks, funds and certificates, it said in one Analysis of the top cooperative institute published in the summer.
In the next year, a further increase to almost 8 trillion euros is to be expected. In the second quarter, too, people in Germany used the low interest rates to borrow money. After deducting debts, net financial assets rose by around 130 billion euros compared with the first quarter to 5336 billion euros. Real estate, which has seen strong increases in value for years, is not included in the data.
Household liabilities increased by 29 billion euros to 1970 billion euros in the course of the quarter. The increase was stronger than in the first quarter. However, since macroeconomic activity picked up noticeably at the same time, the debt ratio declined overall and was most recently 57.8 percent.