World Savings Day boomed in Germany in the 1970s and 1980s, when millions of customers and their children went on pilgrimages to the banks every year to empty piggybanks, invest money and enjoy the growth of financial assets. Today, on the other hand, there is more frustration when it comes to saving. It is the continuing low interest rate phase that is to blame. For some time now, the meagre interest income has no longer been sufficient to at least offset inflation. Negative real returns are the order of the day and cause a loss in value of financial assets in the billions. In this environment, many bank customers ask themselves whether saving makes sense at all.
In fact, however, there is ample need for regular savings. After all, the demographic change in our society is making the „generation contract“, on which the statutory pension is based, function worse and worse. For interest-bearing forms of investment, however, there is the problem that the decline in interest rates has largely eliminated the compound interest effect as an important pillar of asset accumulation. At the latest since the monetary policy decisions of the ECB in September, the normalisation of interest rates has moved into the distant future.
In this environment, the risk aversion of many private households poses a serious problem: On the one hand, investors are understandably unwilling to commit themselves to extremely low interest rates in the long term. On the other hand, many citizens avoid equities and other price-sensitive forms of investment. The result is a gigantic backlog of investments. Often private investors do not trouble themselves at all any longer around the plant of their savings, but leave these simply durably on the Girokonto.
In the economic sense, „saving“ is the part of disposable income that is not consumed. There is no restriction to the investment of money or even certain forms of investment associated with it. The savings can thus also flow into the formation of tangible assets. These can be, for example, renovation measures on the home or the purchase of real estate, or investments by the self-employed in their businesses. The savings that flow into the formation of financial assets range from cash, bank deposits, bonds, certificates, shares and funds to insurance products and more.
However, the extremely persistent low interest rate phase requires a change in savings behaviour, a new savings culture that makes better use of the diversity of savings options. Instead of the traditional fixation on interest-bearing forms of investment, more investments are needed in real assets such as real estate, equities, funds and certificates. The diversity of savings opportunities opens up possibilities for overcoming the backlog of investments. In a modification of the slogan of the Volksbanken Raiffeisenbanken from the 1970s and 1980s, one could say: „Saving is more than money and interest“.