Despite low interest rates, the people of Germany have more money than ever. According to the German central bank, the Bundesbank, household assets in the form of cash, securities, bank deposits and insurance claims rose to a record high of €5.59 trillion ($5.93 trillion) at the end of last year. The increase of €98 billion, or 1.8 percent, was due mainly to the increases seen on the stock market. A good €53 billion alone resulted from valuation gains, in particular from stocks and shares in investment funds.
“Over the course of the year, valuation changes in equities and investment fund shares made a positive contribution overall to the increase in financial assets,” the central bank explained in a statement.
Thanks to the robust labor market and the rise in actual earnings, many people have also been able to set more aside. Nationwide about €45 billion was held in cash and sight deposits, including checking accounts and instant access savings accounts. It was the second highest figure since 1999. Savings remained virtually unchanged despite the continued extremely low interest rates, which provide little return.
Nationwide about €45 billion was held in cash and sight deposits, the second highest figure since 1999.
In the fourth quarter, Germans invested almost €20 billion in insurance and pension funds, which are regarded as low-risk deposits, similar to bank deposits. The increase was roughly equivalent to the previous year’s figure. A total of €2.11 trillion is invested in insurance and retirement pension schemes.
Capital markets declined when compared with previous quarters. In the last three months of 2016, they ditched shares and other share certificates worth almost €1 billion. This was particularly true of domestic companies.
On the other hand, private households spent a good €5 billion in investment funds. The most popular were equity funds and mixed securities funds.
At the same time, low-interest rates were leveraged by Germans to obtain favorable loans, especially for housing construction. Total household liabilities rose by 0.5 percent to €1.67 trillion. Net financial assets increased by 2.3 percent to €3.92 trillion.
Real estate or works of art are not included in the statistics. The study does not show how the assets are distributed.
Stuart Tiffen is an editor for Handelsblatt Global.