Investment Strategies

Profits, Where Art Thou?

Looking for the alternatives. Mario Draghi insists they're out there.
  • Why it matters

    Why it matters

    Europe’s central bank has set its base interest rate to zero, which is bad news for many individuals in Germany who rely largely on bank deposits as a way of saving for retirement.

  • Facts


    • Alternatives for adventuresome investors include developing-country corporate bonds, precious metals and betting on an end to Wall Street’s bull market.
    • Investment returns of 5 to 6 percent beckon for mid-range U.S. dollar-denominated corporate bonds in India, for example.
    • Gold and silver offer safe harbors from shocks on the stock exchanges, and some investment securities can generate returns in any market scenario.
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Criticism of the extremely low interest rates of the European Central Bank continues unabated, especially in Germany. Georg Fahrenschon, president of the association of savings banks, has even accused the currency guardians of expropriating German savers. Another regional savings bank chairman said the ECB is no longer a neutral arbitor.

Mario Draghi, the ECB’s president, refuses to let these charges go unanswered. In an interview with the German daily Bild newspaper, he suggests savers put their money in more profitable investments:

“We are quite aware of savers’ predicament. Not only in Germany do savers have to live with low interest rates,” he said, arguing that alternatives to the savings book can bring “good returns.”

Nor is he backing down from his policies. In response to the question as to when interest rates will once again rise, the former investment banker from Goldman Sachs said: “Quite simply: When the economy is growing more strongly and inflation is once again closer to our goal.”

Anyone who doesn’t want to wait so long must indeed take action.

So where are these “good return” alternatives? Handelsblatt went on a search for the best options – both for Germany and for other struggling savers around the world.

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