Would you rather save or invest?
Financial expert Bernd Lausecker from the Association for Consumer Information (VKI) reveals how best to invest your money in 2021, from what amount investment is worthwhile, and what you can do if the money in the account is running out.
1. The effects of the corona crisis on the money and interest system
The key interest rate has been at the lower limit for a long time, so not much has happened in this regard, explains VKI finance expert Bernd Lausecker. But in his opinion, the pandemic is having an impact: people have become more cautious and pay more attention to their reserves. “The propensity to save has gone up,” says Lausecker.
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And he addresses another effect: on the one hand, governments are spending a lot of money to pump it into the economy, on the other hand, demand in certain areas is completely gone. However, the expert does not believe that there will be any major changes due to Corona. For example, interest rates would not suddenly explode. The monetary system itself will not collapse either, and inflation will remain relatively stable. “The whole thing is still well under control, but it is currently not possible to predict what it will look like in the long term,” says Lausecker.
2. Would you rather save or invest? How to best invest your money in 2022
The expert admits that the interest rate situation for savings accounts and Co. looks anything but rosy because inflation is currently higher than what you get in interest. For this reason, he advises only saving a certain amount of money in a savings account or savings book. “For situations in which the consumer can be heavily burdened, such as possible unemployment or short-time work, it makes perfect sense to build up a certain reserve,” says Lausecker. This should cover three to six monthly salaries. This can happen through such forms of saving, so that you have the nest egg available at short notice, even if you have to “bite the bullet” because you don’t get any interest in it. Everything that goes beyond this emergency reserve should be invested in a reasonable mix.
3. From which amount of investment is worthwhile
For example, if you want to invest in the traditional way on the stock exchange, you can do so from a one-off investment of EUR 3,000 to 5,000. However, this is far from the only possibility. “There are enough offers from financial service providers where you can, for example, pay 150 euros into a corresponding savings plan,” says Lausecker. Before signing a contract, it is important to consider when you will need the money again. The expert advises against long-term contracts that run for around 20 years or more if the capital could be needed again in the medium to short term – even if a little more money could be made in the long term.
4. How sensible gold investments are at the moment
Gold is not to be equated with a secure savings account deposit, it is a matter of speculation on the demand for gold. Anyone who wants to invest in gold is welcome to do so as an addition to their portfolio, as the financial expert reports. It is important that you get the gold you buy at the precious metal value. Commemorative thalers, collectors’ coins and the like are different from gold investments. Another thing to keep in mind is that gold is pretty expensive right now. And it has been shown that gold is stable in the long term, but “is no longer the crisis currency. Gold does not always rise automatically in a crisis. It is not a panacea,” says a financial expert. Therefore, he only recommends it as an admixture.
In addition, with larger, physical amounts of gold, you also have to think about suitable security: the insurance must be adjusted and in the event of a burglary, security precautions should be taken, such as the purchase of a safe.
5. Where to turn as a layman when it comes to investments
Basically, you should be well prepared for such a conversation. The future investor should know how much equity he has, and what insurance and investments already exist. Only then can the consultant give good advice.
It is advisable to visit at least two contact points. On the one hand, you can talk to the bank advisor you trust. But this is “of course trained to sell their group products,” as the expert reports. It is therefore advisable to get a second opinion, for example from an independent financial advisor, so as not to deprive yourself of the option of getting a possibly better product on the open market. Once the customer has obtained both offers, he can take his time to decide which product he likes more.
It is also important to understand exactly what is being completed. “You should ask questions and have it explained to you. There’s no shame in not knowing everything in the financial area in advance. That’s what these supervisors are there for,” says Lausecker.
It is dubious if high growth rates are promised given the current market situation.
6. How useful it is to have a cash reserve at home
You can have a small cash reserve at home in order to survive a day or two without cashless forms of payment in the event of any blackouts or system malfunctions. “I see no reason for thousands of euros to be hoarded under the pillow,” says Lausecker. There bring it even less than the savings book.
7. What to do when the money in the account is running low
In such a case, the expert’s tip is: As soon as you get into financial difficulties, the first way to go is to go to the bank. “The banks aren’t interested in bankrupting their customers,” says Lausecker. The options range from granting a limit to suspending loan installments to deferring repayment. It is best to talk to the bank before you have a permanent or large minus on the account because this gives you a better negotiating position.
In the worst case, if you can no longer pay electricity or rent, you still have to make an appointment with a professional debt counselor. It helps to get out of financial distress. “It’s often the case that you wait too long out of shame or because you think it will work out somehow,” says the financial expert.
8. The effects of the corona crisis on classic life insurance
The corona crisis has relatively little impact, but rather the current interest rate system, as the expert reports. Hardly any or only very small margins can currently be generated with life or pension insurance. “Actually, you have to be prepared that you won’t get what you were promised at some point,” says Lausecker. Termination is not always the best way because of the associated costs. That has to be checked individually. You don’t have to demonize the product itself, but it’s not the icing on the cake at the moment either.
As an alternative, there is the following expert tip: Anyone can accumulate a certain amount in their savings account and then start investing for the long term.
