World Savings Day 2018: difficult environment for private investment

The annual World Savings Day was founded more than 90 years ago to promote the idea of saving. Not only adults are addressed but children and adolescents in particular. In fact, according to our estimates the savings rate of private households in Germany should increase further this year – to a good ten percent of the disposable income. That would be the fifth consecutive increase.

However, the framework conditions for investing are anything but good: 2018 threatens to be the most difficult investment year in a long time. This is not only due to interest rates that can barely be measured and which many private investors have had to accept with gritted teeth for several years now and which are no longer sufficient to compensate for the loss in value due to inflation. This year the situation is aggravated by the performance of equities and equity funds, which have often been negative since the beginning of the year.

With persistently low interest rates and the unsatisfactory share price development, two of the three potential driving forces behind the accumulation of private assets are likely to disappear of even have a braking effect this year. Even if savings – as the third driving force – are developing positively thanks to the rising savings rate, the speed of asset accumulation is likely to halve. In 2018, we expect private financial assets to grow by 2.5 percent to EUR 6.2 trillion. In 2017, the nominal asset growth was still 5.1 percent.

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