Investors are usually in a bind: Either they choose a safe investment or a high return. Both together: does not work. However, scientists have now published a study that refutes this assumption.

Tenor of the Bonn scientists: Real estate has in the past 145 years, a better return than stocks – and the greatest possible security. Economics professor Moritz Schularick explains in the “ Süddeutsche Zeitung “: “The best investment you could make in the past 140 years from a risk-return perspective residential real estate. ”

Investors in real estate were able to make an average return of 8.7 percent. Stocks returned 7.8 percent. Other fixed assets such as bonds or a savings account performed significantly worse at 1.46 percent and 0.3 percent, respectively.

Real estate prices more stable

Economists are surprised to report that real estate returns were much less volatile than equities.

In a crisis, real estate is not sold as fast as stocks. Owners prefer to use their property themselves or rent it. That’s why prices remain stable.

The good development of real estate explains Schularick also with the rigid leases: “Rents are very stable in a recession in contrast to dividends.” Tenants prefer to restrict themselves in other areas, rather than move to a cheaper apartment.

A collapse in house prices would also cause major problems for a country’s banks, which is why governments often intervene to shore up the real estate market.

On the other hand, dividends, the biggest driver behind stock gains, simply fail in bad times. In addition, government incentives to buy real estate fuel demand.

But even a real estate investment can go completely wrong: depending on the country and era, the prices have stagnated again and again in the past 150 years – or even collapsed.

So what does that mean for the future? “As soon as real estate is bought more as an investment, prices could become more volatile,” says Schularick. He warns therefore of a property as a pure yield-enhancer.

Savings rate high, penalty interest rates too: Germans' assets are melting away at the bank

Savings banks and credit unions have long been the advocates of small savers. That has changed: While savers are putting more and more money aside, almost every second bank is charging them a so-called "custody fee". For the banks, this can turn into a business.

Germans are saving their heads off. People and banks are in a race against each other: One is putting more and more money aside, while the other is taking an ever larger share of it. We are talking about the savings efforts of Germans on the one hand and the penalty interest rates that savings banks, cooperative banks and private banks alike charge on the accumulated assets of their customers on the other.

In the face of short-time work, unemployment and a perceived uncertain future after the pandemic and due to closed stores, cancelled Travel and postponed events, many people are currently keeping their money together. The result: In the Corona year 2020, Germans saved more than ever before. According to calculations by DZ Bank, the financial assets of private households increased by 393 billion to a record value of 7.1 trillion euros. Compared with the previous year, this represents an increase of almost six percent. The bank assumes a savings rate of 16 percent. Each household therefore managed to put a whopping 16 out of every 100 euros on the high side.

The trend toward negative interest rates on private deposits continues to grow

The problem is that they are not safe there. That's because the second trend is taking full effect when it comes to Germans' savings. Almost every day, new banks and savings banks are charging 0.5 percent penalty interest, and sometimes more, on private deposits. If the trend continues at this pace, the financial portal Biallo has now calculated, by the end of 2021 more than one in two financial institutions in Germany will officially be charging a so-called "custodian fee.

Source: https://www.focus.de/finanzen/aufgrund-der-nullzinspolitik-der-ezb-sparquote-auf-rekordhoch-strafzins-fuer-sparer-auch_id_13064069.html