Due to inflation and persistently low interest rates on money deposits, German savers have suffered a loss in value of over 30 billion euros in 2019. On average, every German has lost 365 euros in the value of their savings. High losses for German savers due to low interest rates. Savers in Germany are currently suffering high asset losses due to low interest rates and rising inflation.
Although the development of the real interest rate on deposits on current accounts, call accounts, savings accounts or time deposit accounts has recently started to rise slightly again, the all-clear cannot yet be given for savers. This is shown by the quarterly comdirect real interest rate radar, which is calculated together with Barkow Consulting. The real interest rate is the actual interest rate after deduction of inflation. It is therefore the interest rate that savers earn taking into account the loss of purchasing power.
In 2019, the loss in value for German savers amounted to more than 30 billion euros. That is 365 euros per German citizen. In the fourth quarter alone, the loss amounted to 6.6 billion euros. In the previous year, the loss in value for savers even amounted to almost 40 billion euros. That was 470 euros per German citizen.
High loss in value due to low interest rates
Savings lose value faster due to inflation than they increase due to interest – Frauke Hegemann, comdirect.
This is due to savings interest rates below the inflation rate. In 2019, the interest rates for overnight and time deposits, current accounts and savings deposits averaged 0.15 percent. The average inflation rate for the year was 1.45 percent. This results in a real interest rate of minus 1.29 percent.
The loss in value is particularly drastic when viewed over the long term. Since the end of 2010, German savers have already lost 134.6 billion euros due to low interest rates and inflation – that is 1,638 euros per German citizen. Nevertheless, Germans continue to rely on low-interest money deposits. In the last 12 months their volume has increased by 121 billion euros.
Development of real interest rates in Germany (2016 to 2019)
The comdirect real-interest rate radar describes the development of the average real interest rate on overnight deposits, savings deposits and fixed-term deposits and was minus 1.1 per cent in the fourth quarter of 2019
Low earners are more affected
The loss of real interest rates affects low-income earners in particular. The 20 percent with the lowest income in Germany will have lost an average of 1.5 percent of the value of their financial assets in 2018 due to the negative real interest rate. This means that the loss in this group is one and a half times as high as for the ten percent of the population with the highest income. They had to accept losses in value of 0.6 percent of their financial assets.
The reason for this is the different savings behaviour. People with lower incomes invest more money in savings deposits. These include current accounts, call money, fixed-term deposits and other savings accounts. The average interest rate for these products, currently 0.15 percent, is significantly lower than the inflation rate of 1.47 percent (as of the third quarter of 2019). For top earners, on the other hand, low-interest savings deposits account for only 41 percent of total financial assets.
Savers and investors should consider investing in securities to avoid these losses. Savings plans in funds or ETFs can be realized from as little as EUR 25 per month.