As 2019 comes to a close investors have a lot to reflect on. The long-running crisis in the car industry, the running trade conflict between the U.S. and China and a weak German economy have conspired to spread concern amongst investors around the world.
Nevertheless, the Dax has risen by almost 23% since the beginning of the year. Profits are similarly high in the U.S., where the leading indices Dow Jones and S&P 500 gained 19% and 24%, respectively, in the same period.
Discover the most interesting news around the world with Born2Invest mobile app. Get breaking finance headlines focused on investing, biotech, Africa, fintech, and more.
However, the German savers contribute little to these gains. A study by the Frankfurt Stock Exchange and the Frankfurt School of Finance and Management makes it clear that Germans continue to shy away from risk on the stock market. It shows that non-shareholders spontaneously associate the term “stock” with terms such as risk, uncertainty and loss.
As a rule, the longer you invest your money on the financial market, the lower the risk of loss. For example, there is no historical period over 15 years in which the Dax has reported a loss. However, non-shareholders are barely aware of that.
38% of those surveyed for the study correctly indicate that the stated one-year loss probability is greater than the ten-year loss probability. Almost as many, 35%, said that the probability of making a loss over ten years is greater than a period of only one year. 62% of share owners know that the longer they invest, the lower the risk of loss.
Money on the current account means losses
“The high fear of loss in combination with a statutory pension in the back of their minds – even if it is very low – ensures that many Germans avoid the stock as a retirement provision instrument,” Robert Halver, Head of Capital Market Analysis at Baader Bank, told Business Insider. “The state is not taking appropriate measures to bring the stock a little closer to savers,” he complained.
Instead, there are plans, among others by Federal Finance Minister Olaf Scholz (SPD), for a financial transaction tax to be introduced in Germany on stock purchases and sales. That tax would place an additional burden on savers who want to provide for their old age with stock. An answer by Olaf Scholz in an interview with “Bild” in September also sent a completely wrong signal. There he said: “I put my money on a savings book, so even on the current account and there I get, like with all others, no interest.”
It’s even worse: money on a savings book, current account or in bonds doesn’t just mean no interest at the moment, but money are even becoming less and less valuable. Even if inflation is not high at 1.1% in November, the purchasing power of money continues to decline month by month. “You don’t see it at first glance, because $110 (€100) is still $110 (€100). But many Germans prefer to accept this loss of purchasing power instead of making long-term provisions for old age on the stock market,” said Halver.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in BusinessInsider, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
The TopRanked.io Weekly Digest: What’s Hot in Affiliate Marketing [++ KuCoin Affiliate Program Review]
This week, we answer the two questions on everyone’s lips — What do SJWs and e/accs have in common? And...
BIPV Boom: By 2032, Building Integrated Photovoltaics Will Be Worth Over $143B
The next moves by the European Commission and the trend toward a real estate stock composed of Zero Emission Buildings...
French Fintech Company Qonto Launches SME Financing in Italy
Qonto is expanding its financial solutions for SMEs and professionals in Europe, launching the option for companies in Italy to...
Trusters and Leone Investments Finally Receive Approval Under EU Regulation
After almost a month under the new EU Regulation, two platforms, including the historic Trusters launched in 2018 and the...
Coinbase Wallet Has a New Feature: Send Crypto via Web Link
The exciting part is actually in the small print: This is because Coinbase covers the fees for transactions via stablecoin...
Fintech1 week ago
What Fintech Trends Will Mark 2024 in Latin America
Fintech3 days ago
Of the 346 Fintech Companies in Colombia, 35.6% Focus on the Digital Credit Market
Impact Investing1 week ago
Why the Carbon Credit Market Is Not Working
Cannabis2 weeks ago
Germany Plans to Legalize Home Cultivation and Possession of Cannabis as of April 1st, 2024