What is the best way to deal with it if you get a large sum of money transferred for various reasons?
Two experts clarify.
Munich – Whether it's a gift, inheritance, severance payment, real estate sale or life insurance payment: Many people have a large sum transferred to their account at some point in their lives.
But what to do with the money?
Even if it may sound strange: This question can sometimes become a burden.
We therefore constructed four model cases - the couple, the student, the young family and the elderly lady - and passed them on to two experts (see info box at the end) who provide professional financial and investment advice.
We assumed the investment amount to be 100,000 euros, but the statements also apply to smaller sums.
The experts' answers offer good tips and advice, but are not a substitute for personal advice, in which the individual situation and needs can be dealt with in more detail.
The case: 100,000 euros as an inheritance
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Whether the pension is sufficient in old age depends on various factors.
© IMAGO/Michael Gstettenbauer
A lady (around 60 years old) inherits 100,000 euros from her mother.
She has no children and wants to use the money later to supplement her pension.
She wants to treat herself to something from time to time, but the money should last for a longer period of time even in old age.
Good mix of safe investments and returns
As far as the basic orientation is concerned, the experts agree: the lady should invest a large part of the money safely so that it is available when she retires.
At the same time, for a 60-year-old, retirement – and therefore the time when she wants to access the capital – is seven years away.
That is long enough to let at least part of the money work for the time being and thus save it from a loss of purchasing power due to inflation, and in the best case even increase it significantly.
Increase capital as far as possible until retirement
Specifically, the experts therefore recommend a mix of stocks and bonds.
In this case, the proportion of shares should not be too high, after all, share prices can fluctuate and sometimes make losses over a longer period of time.
Merten Larisch from the Bavarian consumer advice center suggests investing up to EUR 50,000 in a stock ETF in the seven years until retirement, for example on the MSCI World stock index or the even broader FTSE All World Index.
With these indices, the share capital is spread across many companies worldwide, which reduces the risks.
The lady should also put 15,000 euros in a call money account with good interest rates, according to Larisch.
"With this money you can buy shares again in the event of a stock market crash and thus restore the original 50 percent share."
In the event of larger price losses, your gut feeling may speak against purchases, but you secure yourself cheap prices.
According to Larisch, 35,000 euros should be parked in tranches of 7,000 euros each in fixed-term deposits with terms of one to five years.
In this way, capital is always freed up, which can be reinvested later with even higher interest if interest rates rise.
In the seven years, even with a relatively low return of three percent per year after costs, the original 100,000 should become around 120,000 euros.
Jürgen Wörl from the private bank Julius Baer proposes a similar approach.
However, he would act a little more defensively, "because the safety of the system is the priority here," says Wörl.
He advises investing only 35,000 euros in stocks, either in global funds or ETFs.
Care should be taken to
that no sales charges apply.
He would invest 65,000 euros in interest investments.
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Follow a payout plan after retirement
But what happens when retirement is here?
Merten Larisch and Jürgen Wörl believe that a payout plan can be a good solution here.
In contrast to a savings plan, you do not pay in regularly, but withdraw money – a fixed amount month after month.
At the moment there are around two to three percent interest on good bank payout plans with a five-year term, says Larisch.
Since that's below inflation, the entire amount shouldn't end up in a bank savings plan.
Larisch therefore recommends taking around 18,000 euros from the investment portfolio for five years and continuing to invest the rest in shares and time deposits during retirement as before - this way the capital can also increase in retirement.
With the payment plan, the lady has an impressive pension supplement of around 300 euros per month from the start of her pension.
After five years, a payout plan can be concluded again, possibly even with better conditions.
If the money continues to multiply in parallel in the stock ETF and the mix of fixed-term and call money accounts, the capital lasts until the end of one's life, according to Larisch.
And: At the same time, there is always something available for additional expenses such as travel.
These experts advised us
The financial expert
Merten Larisch
offers comprehensive and independent financial advice at the Bavarian consumer center for 120 euros per 90 minutes.
You can register on the website of the consumer advice center or by calling 089/552794131.
He advises the lady to invest 50,000 in global stocks until she retires, put 15,000 euros in reserve and 35,000 in fixed deposits.
After retirement, a bank savings plan also makes sense.
The private bank
Julius Baer
advises wealthy clients with an investment capital of more than one million.
It manages 481 billion euros in customer money.
Jürgen Wörl heads the Julius Baer office in Munich.
He advises the lady to invest a maximum of EUR 35,000 in shares and EUR 65,000 in interest investments, since security must be the priority in the few years left until retirement.
A bank savings plan is conceivable after retirement.
More and more pensioners are emigrating to Hungary.
The reason for this is on the one hand the cost of living – but also politics.
List of rubrics: © IMAGO/Michael Gstettenbauer
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