Child, remember your pension: grandma, uncle and parents are happy to give you this advice. They often harvest eye rolls. Young people often don’t want to think about old-age provision.
That doesn’t mean that they just put their money on their heads. In a survey commissioned by the Association of German Banks, almost 90 percent of 14- to 24-year-olds said they were saving money. A part at least now and then, many regularly. About a third of them saved for larger purchases, many also wanted to be prepared for emergencies. And what about old-age provision? Only one in ten actually saved for this.
But how do you do it, saving? Is it worth it, if only 20 euros per month are left over from the Bafög or the starting salary after training?
Annabel Oelmann has a clear opinion on this. “Every Euro counts. The main thing is to get started at all,” says the financial expert at the Bremen consumer advice centre. Saving requires discipline. Her tip for the start: set up a call money account and transfer a certain amount to it every month by standing order. If there is still some money left in the current account at the end of the month, this is also well taken care of in the overnight money account. “If I leave it in the current account, I tend to spend more,” says Oelmann.
The call money account is a safe bet. But interest rates are marginal and far below the inflation rate. At best there is 0.3 to 0.35 percent, as Oelmann says. In the long run, however, the money saved should already increase, i.e. yield. “Only with security one cannot provide for the age , says it. There one has only a safe loss. That applies naturally not only to the age precaution. Angespares should never lose value.
However, returns are linked to risk. And beginners should first approach it. According to Oelmann, index funds, so-called ETFs, are a good start. These are passively managed and replicate a stock index, for example the Dax.
One advantage of ETFs is that they are more widely diversified and therefore less risky than shares in individual companies. Worldwide funds have the comparatively lowest risk, explains Thomas Krüger of the magazine “Finanztest”, which also permanently checks and evaluates equity funds. Funds that track the MSCI World Index were among the good ones. “They are invested in around 1600 stocks worldwide and thus have the risk relatively well under control,” explains Krüger.
In the end, it’s the mix of risk and security that makes the difference. A simple variant is the combination of call money account and equity ETF. “Because it’s as easy as putting on slippers.” For example, if you can put aside 100 euros a month, you transfer 50 euros a month to your overnight money account and 50 euros to your custody account, where an equity ETF is located.
A securities account can, for example, be set up with an online direct bank. This is uncomplicated, says Oelmann. Each index fund has its own number. One looks for this in the depot and selects thereby the appropriate ETF.
Many young people have no idea what is going on on the stock market, if you believe the survey by the German Bankers Association. Two thirds said they had little or no knowledge of the subject. Young savers should read something into the topic before the first Investment in index funds however already, guesses Verbraucherschtzerin Oelmann.
According to “Finanztest” expert Krüger, anyone who wants to invest ethically correct, for example, will also find ETFs with certain sustainability criteria. Defense companies or tobacco companies could then be excluded from the index fund.
How much risk and how much security are appropriate? That, of course, depends on the individual type. A balanced mix of 50:50 is the best option for most young people, says Krüger. Those who are concerned about security leave only a quarter of their savings in the portfolio. Those who are willing to take risks, on the other hand, have only one nest egg on their overnight money account and invest the rest.
The Pantoffel portfolio is quite easy to maintain. The rule is to check once a year whether the desired ratio between the two forms of investment still fits. Even if the stock market is going up or down a lot, you should take a look, says Krüger. With an imbalance of more than ten percentage points, savers should temporarily adjust their monthly payments.
If, for example, 65 instead of the targeted 50 percent of the reserves are in the share deposit, the monthly payment for the share ETF is redirected and invested in the overnight money account until the assets are balanced again. Conversely, one would steer it in the other direction. Krüger speaks of an “anti-cyclical investment effect”. He explains: “You take something out when the stock markets have gone very well and secure a part of it”. Or you get in more when the markets are at a low. “This has proven to be quite advantageous in our analyses.”
Consumer protector Oelmann advises that other financial construction sites should be closed before saving starts. From her point of view, the following points should be noted: Is there a nest egg for unexpected, sudden expenses that one could not easily pay from one’s monthly income – such as a car repair? Have all important insurance policies been taken out? And: Have outstanding loans been repaid? “It doesn’t make sense to save anything on a call money account with mini interest, while you have to service a loan with a higher interest rate,” explains Oelmann.
Otherwise, what remains at the end of the month can be put aside. Not only grandma and grandpa think that’s reasonable. Even if one does not save it at the end perhaps for the age precaution.
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