Asset-poor

Risk-averse Germans are missing out on global wealth gains

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No risk, no fun. Source: Imago/Gary Waters

The well-to-do, it seems, keep getting richer. Global wealth grew by seven percent in 2017 to $201.9 trillion, roughly two-and-a-half times the world’s GDP for the entire year, according to the Boston Consulting Group’s Global Wealth Report.

Germans too saw their assets increase, but gains were sluggish and not as much as they could have been, according to the report. This is because Germans have a strikingly different investment culture, preferring to invest their hard-earned money cautiously. It was primarily risk-inherent, well-performing stock, both equities and investment funds, that grew the most in 2017.

The Germans’ aversion to risk is quickly summarized by what could be called the country’s mantra: sicher ist sicher or “safe is safe,” a phrase used to emphasize the importance of making careful, pragmatic decisions.

15 Germany lagging behind-01

Even though Germany’s DAX index, comprised of the country’s biggest 30 companies, grew last year by a respectable 12 percent, total assets in the country grew by just 4 percent to $7.5 trillion. While that’s a huge amount in euro terms, Germany’s wealth grew more slowly than the global average, the report said.

The light uptick in Germans’ overall assets has to do with their conservative investment behavior. Around 36 percent of the country’s private assets are invested in cash or savings deposits, significantly more than in Asia and the United States but stunted by low interest rates. Equities or funds that offer higher return opportunities – of course with a greater risk of loss – accounted for only 19 percent of Germany’s assets.

15 Germany lagging behind 2-01

“Due to the relatively low proportion of investments in shares and funds, Germans have benefited proportionally less from strong stock markets,” said BCG partner Anna Zakrzewski.

While risk-averse behavior is pronounced in Germany, they’re not the only ones. The BCG study showed that Europeans in general are hesitant to invest in equities.

Global inequality

When looking by country, the United States, China, Japan and Britain have the most concentrated wealth, followed by Germany in fifth place. But in the next five years, BCG experts expect China to surpass the US in generating more new wealth.

Within each of these respective countries, it is the super-rich who are seeing their investments pay off. According to the BCG report, millionaires now own about half of the world’s assets. Germany has an estimated 443,000 people in the millionaires’ club; if they would take more chances, who knows, they could become billionaires.

Michael Brächer is Handelsblatt’s Switzerland correspondent. To contact the author: braecher@handelsblatt.com

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