German Investment Trends: Safety First, But Risk Appetite is Rising
How do you choose where to put your money? If you're in Germany, the answer has traditionally been: play it safe. However, a significant shift is underway. According to the latest representative forsa study commissioned by Gothaer Asset Management (GoAM), while the classic savings account remains the most popular investment vehicle, Germans are gradually warming up to riskier assets in search of better returns.
This evolving mindset offers a fascinating point of comparison for American investors. Just as Germans navigate their options—from ultra-safe Sparbuch (savings book) accounts to more volatile stocks—Americans weigh choices like high-yield savings accounts against stock market investments. Understanding these global trends can provide valuable context for your own financial strategy.
The Enduring Reign of the Savings Account (But Its Grip is Loosening)
The data reveals a strong cultural preference for security. In 2018, the savings account was still the most popular form of investment, with 39% approval. However, this represents a significant decline of 12 percentage points since the 2015 study. Similarly, building society contracts (Bausparvertrag), another pillar of German conservative finance, have fallen from 35% to 28% in the same period.
This decline highlights a growing dissatisfaction with the near-zero returns offered by these traditional, safe-haven products in a prolonged low-interest-rate environment.
The Rise of Risk: Funds and Stocks Gain Ground
As confidence in traditional safe assets wanes, riskier alternatives are moving into the spotlight. The study shows a clear trend:
- One in five Germans (20%) now invests in funds.
- 26% of respondents stated they are willing to accept higher risk for the chance of a higher return.
This marks a notable change in the German investment psyche, which has historically been characterized by extreme risk aversion.
Security is Still King: The Core German Investor Mindset
Despite the growing appetite for risk, the fundamental desire for security remains deeply ingrained. When choosing investments, the top priority for Germans is existing security (52%), followed by flexibility (30%) and only then high returns (9%).
This caution is fueled by widespread fears:
63% fear inflation.
Over half of all Germans in every age group from 18 upwards worry that their investments will not be sufficient to maintain their current standard of living in the future.
The Driving Force: Criticism of ECB Policy and the Search for Yield
A key driver behind this shift is growing criticism of the European Central Bank's (ECB) low-interest-rate policy. 57% of Germans now consider this policy wrong, an increase of 11 percentage points since 2016.
"Germans are increasingly realizing that they, as savers, are among the hardest hit by the low-interest-rate policy and that their retirement provision is at risk," explains Christof Kessler, Chairman of the Board of GoAM. This realization is pushing investors toward yield-stronger forms of investment, leading to a 3-percentage-point increase in approval for funds compared to the previous year.
Where is the "Risk" Money Going? A Look at Fund Choices
For those Germans venturing into the world of funds, the preference is clear. Among fund investors:
44% invest in equity funds.
43% invest in mixed funds.
Roughly one in four investors puts money into bond funds.
This indicates that even when embracing more risk, German investors often prefer the diversified, managed approach of funds over direct stock picking.
Key Takeaways for Savvy Investors
The German market shows that a balance between safety and growth is a universal concern. While the specific products differ—comparing a German Bausparvertrag to a US 401(k) or IRA—the core principles are similar:
- Low Returns Erode Safety: Excessive caution in a low-yield environment can itself become a risk to your long-term financial health and retirement goals.
- Diversification is Key: The German move toward diversified funds mirrors sound advice everywhere: don't put all your eggs in one basket.
- Understand Your Risk Profile: Your investment choices should align with your personal comfort with risk, your time horizon, and your financial goals.
Methodology: The forsa study surveyed exactly 1,020 people aged 18 and over in January 2018.