Investment Year 2017: Real nadir for real interest on private monetary assets

Judging by our provisional calculations, monetary assets owned by private households in Germany rose during the 2017 investment year by approx. EUR 300 billion to EUR 6.1 trillion. At 5.2 percent, growth was above the figure of 4.7 percent for 2016. The growth in assets was again driven by citizens being assiduous savers and by price gains in the equity markets. By contrast, the interest rates on deposits, bonds and insurances hit a new low.

Evidently, private households have not allowed the low interest rates to discourage them from saving and are putting a growing portion of their income to one side. Thus, the savings ratio increased for the fourth consecutive year to a figure of probably 9.8 percent. Alongside the savings, rising equity prices were the second pillar supporting the accumulation of assets in 2017. In total, price gains delivered a value appreciation of EUR 93 billion in equities, equity and mixed funds as well as certificates owned by private households.

In recent years, real interest on deposits, bonds and insurances remained positive as inflation rates were low. However, that all changed in 2017 with the “return” of inflation: The inflation rate climbed presumably to 1.7 percent and real interest rates headed sharply into the negative zone at -0.8 percent. For private households this spelled a EUR 38 billion loss in the value of their monetary assets. For 2018, assuming overall conditions hardly change, we expect a nominal rise in private monetary assets in Germany by a good four percent to EUR 6.3 trillion.

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