The corona paradox of German savers: Investing money in times of crisis

The Corona crisis caused an unprecedented economic slump in Germany. There was also turbulence on the stock exchange. But the Germans are of little interest – they even want to invest more regularly.

Even before the Corona crisis really hit Germany, the stock exchange had already foreseen the economic consequences: The Dax has slumped sharply since mid-February 2020, but has since recovered.

But how does such a fall in price affect Germans? Has fear of the stock market increased since then?

No, on the contrary. This is shown by the Deka investor monitor, which is available to t-online in advance – a representative survey by Dekabank, the securities house of Germany’s savings banks. Accordingly, in March, 26 percent of those surveyed said they wanted to invest more money in a savings plan this year. In July it was already 34 percent.

That’s why Germans are drawn to the stock exchange

Deka economist Gabriele Widmann sees the explanation for this in the consequences of the pandemic. According to the economist, three reasons can be identified:

  1. Income is uncertain: “The Corona crisis has shown that income can be lost from now on,” said Widmann in an interview with t-online. She means unemployment or jobs that the self-employed miss. “Many have seen that it makes sense to have money on the high edge.” Because state aid would often only flow with a delay.
  2. State incurs debts: As a result of the Corona crisis, the state has borrowed more than 200 billion euros – and that in 2020 alone. “Many people therefore expect that the federal government will have less money available in the future – for example for pensions.” However, the following applies anyway: A high absolute national debt says little about whether a state is financially viable or not. What is important is the relative indebtedness – that is, national debt compared to gross domestic product. If economic output in Germany increases again, Germany could grow out of its debts, say economists.
  3. Interest rates stay low: In view of the Corona crisis and the billions in aid from the European Central Bank, economists expect interest rates to remain at a low level. “Many savers now understand that too.” Because low interest rates mean hardly any income from savings accounts. “Investments in the stock market offer a much higher return in the medium to long term,” says Widmann.

However, the vast majority do not want to invest in the near future

That is why the will of many people to invest their money has increased. In July, for example, 48 percent said they were long-term investments in shares or Equity funds (rather) worth it. 26 percent said no, another 26 percent gave no answer.

But initially the will remains – there is still a lack of implementation. Only 15 percent of those surveyed said that now was the right time to invest. 21 percent are unsure of the exact time, but can certainly imagine an investment. The vast majority – at least 51 percent – said, however, that under no circumstances would they want to invest in stocks or equity funds in the near future.Gabriele Widmann: The graduate economist has been with Dekabank since 2001. Her specialties are besides the areaGabriele Widmann: The graduate economist has been with Dekabank since 2001. In addition to the “Economy and Markets” area, her areas of specialization include securities investments, sustainability, and women and finances. (Source: private / Deka)

“Most like to avoid the topic of finance,” said Widmann. For many, there is also a certain fear. “People want to get rid of all uncertainties before they invest. But that is impossible.”

This is how investors reduce their risk

Investment experts like Widmann therefore advise private investors to invest in a broadly diversified fund – which invests the money in various sectors around the world. “This is how investors noticeably reduce their risk.” A cheap alternative to active funds are so-called ETFs, also called index funds. A computer algorithm simulates a stock index such as the Dax. Investors therefore invest in all stock exchange companies that an index lists.

In order to make the exact entry point irrelevant, investment experts advise investing money with the help of a savings plan. Private investors pay in a certain amount about every month. Another advantage: investors do not need a large amount of assets. Instead, you can sometimes invest from 25 euros.

Widmann said: “For investors is one Fund savings plan a good entry into the stock market. “In addition, the survey results also show that whoever has invested once will also be less afraid of it in the future.

Related Articles

Back to top button