Inflation and savings: How do I invest 10,000 euros now?

Created: 06/27/2022, 04:49 am

Inflation makes the value of savings melt away.

What is the best way to invest a large amount of money now?

Financial experts provide tips for every age group.

Munich – Inflation is in full swing, the European Central Bank is raising the key interest rate – as a result, interest rates for loans are rising, but not for savings.

With an inflation rate of just under eight percent, many a deposit is melting away.

Invest money: Financial experts provide tips for all age groups

So what do you do when, unexpectedly – ​​through inheritance, a gift or a lottery win – a large amount of money of 10,000 euros flows into the till at your free disposal?

Spend directly on a trip, a car?

Or better stock up on reserves for unexpected expenses so you don't look stupid when the dishwasher refuses to work?

Munich financial experts Dr.

Dirk Rathjen from the Institute for Wealth Creation Bavaria (IVA) and Jörg Kintzel from the financial service provider Valuniq.

In addition, we - as an absolutely independent consultant - asked Merten Larisch from the Bavarian Consumer Advice Center for his financial tips.

Ultimately, the best way to invest depends on your individual life situation.

Together with the experts,

examined the investment options for the amount of EUR 10,000 and put together possible strategies.

Regardless of age, every saver should first clarify the following questions for themselves: When do I want to access the money, what return do I want to achieve, how much risk can I take and withstand in the long term?

This investor profile determines the strategy.

Invest 10,000 euros as young parents: Think about your own provision in good time

Parents who want to provide for their children or are even aiming at owning a home should already have defined a strategy for saving their own capital.

(Iconic image) © Panthermedia/Imago

Parents, 35 years old:

There is still a long time until retirement, but at the same time the expenses are high.

Parents who want to provide for their children or are even aiming at owning a home should already have defined a strategy for saving their own capital.

Anyone who then gets “extra” money should invest it as safely as possible.

Depending on your own investment horizon, experts recommend, for example, investing the majority of the sum in overnight or time deposit accounts.

▶ That's what the consumer advice center says: Merten Larisch advises young parents not only to think about their children, but above all to think about their own provision.

If the foundation has already been laid - for example through a combination of stock ETFs (mutual funds) and bank savings plans as more conservative investment strategies - one can consider investing 80 percent of the 10,000 euros in stocks - provided the investment horizon is long enough.

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▶ That's what the financial brokers say: Jörg Kintzel emphasizes that you can also invest up to 3000 euros in real assets, because: "If I give my wife a beautiful diamond ring, I'm not only making her happy, I'm also investing in a stable value .

The jeweler I trust is the right contact person.

There are diamonds that will increase in value over the next few years.

I would always go for jewelery with a lot of stone and little material around it, because the value is in the stone – so rather earrings than a ring.” Certain low-priced watches could also target increases in value.

Nice side effect: You can use the investment every day – and wear it on your body.

If you want to deal with money yourself, you can invest 2000 euros yourself and “play” with it on the stock exchange.

However, this requires time and a clear plan as well as a limit for profits and losses, according to Kintzel.

A safer alternative to investing in stocks can be bonds with short maturities because they don't fluctuate quite as much, explains Dirk Rathjen: "However, the average return here is significantly lower than with stocks.

A bond ETF is a good place to start, for example Euro Aggregate with many mixed bonds.” But: “In periods of low interest rates, the properties of the bond can also have a negative impact on assets: when interest rates rise, bond prices fall, albeit usually not that extreme.

Fixed deposits can then bring higher interest rates.” 

Invest 10,000 euros for seniors: top up your pension and plan generously

It is important to many older people to be able to leave something behind for their children and grandchildren (symbol image).

© Sven Simon / Frank Hoermann / Imago

Retirees, 68 years old:

After the current average life expectancy, retirees still have a few years ahead of them – fortunately many of them even have a lot.

▶That's what the consumer advice center says: Merten Larisch advises counting up to 95 years in order to avoid the risk of being left without sufficient capital in the end.

Nevertheless, the time factor is uncertain.

It is important to many older people to be able to leave something behind for their children and grandchildren, but at the same time to top up their own pension if possible.

Merten Larisch explains how this can be done using a so-called payment plan: "This plan is my pension payer, which I buy myself over a certain period of time - for example over five years for 1,000 euros a month, i.e. a total of 60,000 euros.

This is a variant of the secured fixed-term deposit and is well suited to investing money and periodically withdrawing partial amounts for use.

The payments are subject to interest

usually a little lower than with a fixed-term deposit without a withdrawal function.

The rest can be put into a fixed deposit account for the subsequent bank withdrawal plan, for example over the next five years, so that I have already made provisions for monthly withdrawals for ten years.

Anything left over can be invested in shares or given to the heirs.”

▶That's what the financial brokers say: Jörg Kintzel and Dirk Rathjen recommend - in contrast to the consumer advice center - to also look around at insurance providers and their range of unit-linked insurance, which enable monthly payments and an annuity of the investment amount.

The guaranteed interest rate is often low – and currently averages 0.25 percent.

However, Jörg Kintzel sees few alternatives.

“You also always have the option to withdraw money during the term for unforeseen expenses at a lower rate of return.

Some providers even include a share for care in the retirement, but many still don't like to think about this case.

It is best to plan this investment long before you retire – because poverty in old age is no longer an isolated phenomenon.

The topic is complex, advice makes sense.

Dirk Rathjen knows: "If you screw something up there, you can't make amends in the last few meters." 

Invest 10,000 euros: Invest wisely to fulfill wishes

A career starter can consider whether he would rather invest the majority of the money in a security-oriented manner.

(Iconic image) © DC_27/Imago

Career starter, 25 years:

A career starter who would like to invest his 10,000 euros to finance short- or medium-term goals or expenses - for example a fancy car, travel - can consider whether he should spend most of the money, i.e. around 70 percent – prefers to invest in a security-oriented manner.

For example, via a call deposit or fixed-term deposit account.

The consumer center says: According to Merten Larisch, you can always find the best offers via comparison platforms such as biallo.de or the monthly overview of Stiftung Warentest, which are currently between around 0.1 percent for overnight money and 1.0 to 1.3 percent move for fixed deposit.

On the subject of equities: "You have to understand that profits tend to be made over the long term and that price losses or a loss of returns are possible," says Merten Larisch.

▶That's what the financial brokers say: According to Dirk Rathjen, foreign banks sometimes even offer up to 1.5 percent: "It's important to make sure that such an investment is deposit-protected.

This can be easily implemented via investment platforms such as Weltsparen.de - they collect investment offers from many banks in the EU, so that I can also invest with a bank in Estonia and thus achieve higher returns.

Weltsparen checks the banks and enables investors to switch easily if another institute offers higher interest rates.” If the money is to increase significantly and lay the foundation for a fortune, even the young professional cannot avoid shares – according to the unanimous expert advice.

"Anyone who wants to gain purchasing power must participate in entrepreneurship and its profits - i.e. invest in shares."

Rathjen emphasizes: You only don't lose money if the deposit balance is lower as a result of a price slump, if you don't sell.

For beginners, he advises investing in broadly diversified indices such as MSCI World or Europe instead of investing in individual stocks, since diversification across different companies minimizes the risk of losses.

"It's not good when you need money when markets are falling or an in stock has just fallen 30 percent.

Therefore, the liquidity factor is one of the most important to define your own strategy.

But your own willingness to take risks also plays a role,” says Rathjen.

So if you stick to the “package insert”, you can save up a really nice foundation.

The rule of thumb is:

More options in mid-life: from fixed-term deposits to equity funds

A couple in their mid-50s will most likely already have an investment strategy defined and some basic savings.

(Iconic image) © Kniel Synnatzschke/Westend61/dpa-tmn

Childless couple, double earner, 50 years:

The same applies here: if you want a return above the inflation rate, you can't avoid the share.

A couple in their mid-50s will most likely already have an investment strategy defined and some basic savings.

Therefore, one can usually take more risks, especially since there are no children to provide for.

In order to generate maximum returns, the entire 10,000 euros could be invested depending on the reserve situation and liquidity requirements.

If you want to dispose of part of the money in the short term, you can invest it in call and time deposit accounts.

Here, too, a broad portfolio is recommended for risk diversification.

▶This is what the consumer advice center says: According to Merten Larisch, for example, MSCI World variants cover not only industrialized countries but also emerging countries such as China, India and developing countries and thus also give the depot a sustainability effect.

According to Merten Larisch, ETFs on real estate companies could be added to the portfolio.

In addition, one is the indirect owner of thousands of individual properties, which are managed in the most efficient way and new properties are also acquired cheaply and existing ones are sold at significant profits.

Strictly speaking, however, this component also belongs to the stock market.

▶That's what the financial brokers say: Jörg Kintzel recommends consulting a consultant if you want to massively maximize the return.

But: “You always have to stay in touch with your advisor and see how he manages the money.

And maybe even switch if it doesn’t perform as well as you want – there are definitely differences, but you only notice them when you’re already working with someone.” to profit from the market.

Kintzel advises against it: "Especially newly launched funds make no sense - the market was flooded with them for a while and none of them could deliver the promised return.

As a result, customers withdrew money and the funds had to stop paying out,

since there was not enough free liquidity.

This meant that the customers could no longer withdraw any money despite the termination, even though they had perhaps already budgeted for the money.

If you have an affinity for it, then definitely invest in one that has existed for a long time and always see the investment in the long term.

Author: U. KREMER

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